- The liquidation of technology stocks has pushed Newegg Commerce (NEGG) less than $5 per share.
- Despite its reputation as a meme store, there’s so much more to it.
- Still growing at a steady pace (as shown in its latest earnings report), you may want to consider NEGG stock after its recent weakness.
With its move to less than $5 per share, Newegg Commerce (NASDAQ:NEGG) fell into penny stock territory. This is a stunning reversal for NEGG stock. Over the past twelve months, it has traded as high as $79.07 per share.
If you got close to its highs, I can understand why you might want to sell and move on. But if you don’t have it? I wouldn’t take a difficult pass from the start. Instead, you might want to dig deeper with this online tech retailer.
Why? Newegg may have a reputation for being a meme store. Specifically, one of dozens of “equally managed” meme stocks that saw sharp spikes in 2021 that they couldn’t sustain. Yet if you take a closer look, you’ll realize there’s more to its story than its ties to the meme stock phenomenon.
NEGG Stock at a Glance
Based in California, as mentioned, Newegg Commerce is a technology-based e-commerce company. Since its inception over twenty years ago, it has become one of the leading online retailers of electronics and PC components. For many, this may not be the most exciting activity out there.
Yet, boring or not, he found success targeting this niche. At present, it is a multi-billion dollar business, which continues to grow at a steady rate (see below). Along with that, it is also always profitable. This is something that many names in technology, even some of the most promising ones, have yet to achieve.
In short, the “meme stock” reputation of NEGG stock is a bit unfair. Yes, on several occasions in 2021, the speculative frenzy, nothing particular with its fundamentals, could have resulted in several temporary price peaks. However, the trend of meme stocks has practically played out.
Going forward, chances are that Newegg will be judged more on its fundamentals and less on its popularity among Reddit business community. While that may not thwart the downward pressures on it right now, in the long term however, continued strong fiscal results could be what helps this stock make a comeback.
Newegg’s latest financials show it continues to grow
Obtaining financial information on NEGG shares is not easy. Although its operational business is based in the United States, this entity is incorporated in the British Virgin Islands and is majority owned by a Chinese technology company. Interactive link.
With this, it is classified as a “foreign private issuer” and therefore does not file annual (10-K) and quarterly (10-Q) reports like a US-based company. Instead, it provides investors with financial information through a 20-F annual filing. Still, while that may create a time lag, with its 20-F filing for 2021 last month, we have some idea of Newegg’s current performance.
For 2021, Newegg reported total revenue of $2.38 billion, up about 12.3% for the year. Not bad, given the challenges posed by the global shortage of semiconductors. Net income of $36.2 million was up about 19.2% from 2020. Yes, growth slowed year over year. In 2020, thanks to the tailwinds of the pandemic, revenues increased by 37.9%. It also went from a net loss to a net profit.
But the 2021 numbers show us that, far from the pandemic being a “once and done” event, the company is retaining the increase in activity and building on it through continued growth.
The verdict on NEGG Stock
It goes without saying that Newegg Commerce is not a value for everyone. Stocks could experience increased volatility, and not just because of its ties to the stock meme phenomenon. Its status as “China stock” is also of concern to some. This is due to fears that regulatory scrutiny could lead many Chinese stocks to pull out of US exchanges.
Nevertheless, much of this risk is likely factored into today’s valuation. With its return to penny stock territory, it’s clear that the meme crowd isn’t as active there as it once was. He no longer moves primarily on the whims of the crowd itself. Instead, going forward, he’ll likely advance on his own merits instead.
Bottom line: you might want to consider NEGG stock today. It is showing steady growth, with a possible boost as the chip shortage eases.
As of the date of publication, neither Louis Navellier nor the member of the InvestorPlace research staff principally responsible for this article holds (directly or indirectly) any position in the securities mentioned in this article.