The City of Industry-based electronics retailer went public in May via a reverse merger with a publicly traded sister company, Lianluo Smart Ltd., based in Beijing.
Its shares — priced at about $10 — began trading on the Nasdaq under the symbol NEGG, and it had a market value of about $4 billion.
By July 1, the stock price was at $17, and shortly after on July 7, it peaked at $67 with a market value of nearly $25 billion. Some 76 million shares traded that day, compared to an average volume of about 500,000 in June.
Industry watchers said the surge was prompted by chatter on Reddit and Stocktwits message boards about buying up the stock, which similarly boosted the price of AMC Entertainment Holdings Inc. and GameStop Corp. in recent months.
Some also attributed the rise to the company’s July 7 launch of ENIAC — an on-demand assembly of custom PCs for gamers.
“Our purpose-built PC assembly line is staffed with skilled technicians,” Director of Engineering Vishal Mane said in a statement. “With a massive component inventory on hand and a team of skilled builders standing by, Newegg is simply the best option for customers who refuse to compromise on quality and who want their expertly built computers delivered more quickly than any other (build-to-order) service.”
But by July 8, the price of Newegg shares was down to $45, and the downward spiral continued, with prices closing at $26 on July 15.
The leveling off followed a July 14 statement issued by controlling shareholder, Beijing-based Hangzhou Lianluo Interactive Information Technology Co. Ltd., announcing that Newegg’s gross merchandise value, net sales and net income for the six months ended June 30 were expected to increase over the GMV, net sales and net income for the same period in 2020.
Newegg sources merchandise — mostly desktop computers, laptops and accessories — from more than 2,000 brands, including Asus, HP, Lenovo, Dell, Acer, Microsoft, Samsung, LG, Gigabyte and Westinghouse. It has about 36 million registered customers, of which 4.7 million have purchased at least one item from Newegg in the past 12 months.
The company also caters to 610,000 registered business clients, such as health care providers, educational institutions, government agencies, and various small and mid-sized businesses.
