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Why Lizhi Stock Skyrocketed Today

By Joe Tenebruso - Feb 4, 2021 at 4:20PM

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The Chinese podcast platform has global ambitions.

What happened

Shares of Lizhi (LIZI 2.56%) soared 70% on Thursday, furthering the torrid rally in the Chinese audio entertainment company's stock price in recent days.

So what

On Thursday morning, Lizhi said it struck a deal to create a branded podcast channel for Pop Mart, a leading toy designer and retailer in China. It will mark the first such channel on the company's new Lizhi Podcast mobile app. 

"Branded podcast is a new way of branding and this collaboration is an attempt of Pop Mart to use a different medium to increase its brand awareness among its audience," Lizhi CEO Jinnan (Marco) Lai said in a press release. "Lizhi looks forward to collaborating with more enterprises and brands in the future to help them reach new audiences, increase brand awareness, and engage their users with curated podcast content." 

A rapidly rising stock chart

Lizhi's investors have enjoyed incredible gains in recent days. Image source: Getty Images.

The announcement comes on the heels of the letter Lai sent to shareholders on Wednesday, in which he shared his vision of building the company into a global audio entertainment powerhouse. "Looking ahead in 2021, our core strategy is to create more connections between people and provide them companionship through our online audio platforms, aiming to increase our brand recognition and attract a broader user base all over the world," Lai said. 

Now what

Incredibly, Lizhi's share price has soared more than 400% in the past week. However, there hasn't been much news outside of the Pop Mart deal to support such a large upward move. When a stock's price rises rapidly in a manner that can't be explained by its fundamental business performance, investors should be careful. Taking some profits in Lizhi might be a prudent move.

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