Shares of Newegg Commerce (NASDAQ:NEGG) had fallen more than 16% by noon on Monday, continuing the pullback from the highs that the online consumer-tech retailer reached last week as options trading became available on the recent IPO, but were in short supply.
Newegg is a top online destination for computer components, consumer electronics, peripherals, and smart-home and gaming products. The company just went public via a reverse merger with a special purpose acquisition company, or SPAC. It seemed to garner meme stock status almost immediately, and it soared over 1,000% very quickly.
Yet there was no fundamental basis for the run-up in its shares, and having them return to earth rather quickly is to be expected. Even so, the stock remains up 167% from where it started last week, but investors shouldn’t be surprised to see it go lower still.
Newegg has a solid retail history and reputation, so this isn’t some fly-by-night penny stock. The long-term growth story is likely just as solid, but not at any price, and investors should wait for Newegg’s stock to return to more-reasonable and rational levels before they consider buying the online retailer.
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