What happened
Shares of Newegg Commerce (NEGG 1.34%) have more than doubled this week, climbing 136% by early Friday, as the tech-focused online retailer seems to have cemented meme-stock status.
So what
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.
Image source: Getty Images.
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.
Now what
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.
