Shares of Newegg Commerce (NEGG 10.53%) fell 34.3% in August 2025, according to data from S&P Global Market Intelligence. The home electronics and computer parts e-tailer has behaved like a meme stock in 2025. August was probably just the start of a correction of Newegg's inflated stock price. I say this as a longtime Newegg shareholder, by the way -- the stock was rising too high, too fast, and for all the wrong reasons.
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The meme stock surge was too good to be true
If you bought Newegg shares on the last trading day of May and sold them at the end of July, you saw a 1,220% return on your investment. A $1,000 Newegg bet was worth $12,200 at the end of that period. Even now, after August's steep price drop and a continued downtrend in early September, Newegg's shares are up more than 500% in three months.
The company did have some news to share last month. Newegg reported first-half results on August 21, showing 12.6% year-over-year revenue growth and a stabilizing bottom line. Net losses decreased from $25.0 to $4.2 million. Newegg reported more repeat customers and higher average order values. New gamer-friendly products from Advanced Micro Devices and Nvidia helped Newegg achieve these robust results.
The financial picture is clearing up after a couple of difficult years. But the half-year report didn't boost the stock at all. Newegg's stock fell 13% the next day. Generally speaking, the drawdown from earlier peaks simply continued as before.
The short squeeze behind Newegg's drama
Newegg's stock has all the trappings of a classic meme stock this summer. Short-seller interest soared to 331% of the market float in early July, which is only possible with naked short-selling. Newegg traders enjoyed a strong short-squeeze effect, followed by a natural drop when the artificial price manipulation faded out. These sudden price bursts never last forever.
The aftermath of such extreme short squeezes typically follows a predictable pattern. Once the buying frenzy subsides and short sellers have either covered their positions or new shorts have entered at higher prices, the stock tends to find a new equilibrium -- usually far below the squeeze peak but often above the pre-squeeze levels.
In Newegg's case, it's still a story in progress. Short interest remains high with 85% of the float currently on loan to bearish investors, and the share price has nearly doubled in 52 weeks. All of this drama is new and unusual for this sleepy stock, where the chart trended slowly downward from the spring of 2022 to July's sudden burst of activity.
The thing is, even the loftiest peak of this price spike looks like a tiny bump on a long-term downward trend. The 1,220% short-term spike was also a 90.5% plunge from Newegg's five-year highs.
I like Newegg's business and use it all the time, often weighing its prices and service against those of Amazon and Walmart. But this plucky Californian e-commerce outlet remains largely unprofitable after all these years.
Objectively speaking, Newegg's stock looks inexpensive at 0.47 times trailing sales. But it's probably cheap for good reasons. It's a turnaround play, but probably not worth your interest until the meme stock nonsense has cooled down completely.
