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How Newegg Commerce Shares Gained 13% Last Month

By Anders Bylund – Sep 3, 2021 at 12:57PM

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The electronics retailer's market moves in August had little to do with serious business news.

What happened

Shares of Newegg Commerce (NEGG -2.40%) rose 13.3% in a rough-and-tumble August, according to data provided by S&P Global Market Intelligence. The electronics e-commerce retailer did report first-half 2021 results at the very end of the month, but share prices fell 4.7% the next day. For the most part, the stock was swept up in the unpredictable shenanigans of so-called meme stocks.

NEGG Chart

NEGG data by YCharts

So what

Newegg appeals to the meme stock crowd due to its relatively recent entry into the public market. The stock is not heavily shorted, with only 0.3% of the share base being borrowed by investors with a negative view. But the massive jump Newegg posted in June essentially painted a meme-stock target on the company's back. Newegg has been a volatile ticker all summer long, swinging from $16 per share at the low end to $79 per share at the top. Today, Newegg's shares are back down to $19 per stub.

The glossed-over earnings report was quite impressive, by the way. Newegg's sales rose 40% year over year to $1.2 billion. Bottom-line earnings increased by 14%, stopping at $21.6 million or $0.05 per diluted share. Analysts didn't prepare any estimates for this period and Newegg's management never issued guidance for its first report as a public company, and I sure don't expect the company's future financial reports to cover six months rather than a single quarter each. Still, the raw results hold up well to the sales trends posted by sector peers Best Buy (20% year-over-year sales growth) and Conn's (Q2 revenue down 5%).

A blue key with a shopping cart on an otherwise grey computer keyboard.

Image source: Getty Images.

Now what

Both Best Buy and Conn's are trading far closer to their annual highs than to their 52-week lows, as the home electronics market continues to be fertile ground for sustained business growth. I don't expect Newegg to get back to the levels of June's temporary spike anytime soon, but the young stock (tied to a decades-old business operation) deserves to stabilize and start reflecting the company's solid business prospects.

Anders Bylund owns shares of Newegg Commerce, Inc. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Newegg Commerce, Inc. Stock Quote
Newegg Commerce, Inc.
$1.63 (-2.40%) $0.04
Best Buy Stock Quote
Best Buy
$81.37 (-2.29%) $-1.91
Conn's Stock Quote
$7.87 (-13.52%) $-1.23

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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