Shares of Newegg Commerce (NASDAQ:NEGG) have more than doubled this week, climbing 136% by early Friday, as the tech-focused online retailer seems to have cemented meme-stock status.
When Newegg went public in May through a reverse merger with special purpose acquisition company Lianluo Smart, it didn’t garner investor notice. But the availability of option-based trading in early July sent the stock off to the races.
As it suddenly became difficult to find options contracts, their scarcity caused more traders to want them, leading Newegg’s stock to open from under $17 a share on July 1 and hit $79 a week later.
Newegg closed below $53 a share on Thursday, down 28% from its high point, but it’s still a triple so far this month, and shares were up another 25% in morning trading on Friday.
Newegg is no fly-by-night operation, having been founded back in 2001 and earning a reputation as a leader in PC components and the build-your-own computer market. It remains a top online destination for computer components, consumer electronics, and peripherals, as well as smart-home and gaming products.
The tech company has grown earnings over 35% annually for the past five years, giving it a solid financial foundation to build on. The current frenzy over the stock isn’t connected to the fundamentals of its business, though, so while Newegg should be a stock that investors can put on their radar to buy, waiting for the mania to subside is the better option at this point.
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