Newegg Commerce (NASDAQ:NEGG) is a California-based online retailer that specializes in computers, electronics, PC and gaming accessories and related products. Newegg has been in business since 2001, but the company only went public this May. In a reverse merger (details here) it became Newegg Commerce. NEGG stock began trading on May 20, and since then it has been a wild ride for investors. Naturally, it joined the ranks of meme stocks, and started off July by rocketing nearly 300% in just three days. After closing at $67.57 on July 7, the inevitable correction began.
With shares now trading a bit over $20 at the start of July 30, this could be an opportunity for investors. Newegg is a well-known name and a popular site with PC enthusiasts. The company has expanded its product offerings (even offering clothing and home furnishings) through a third party marketplace. It operates fulfillment centers that ship out over 55,000 packages daily in North America, with 91% of those being delivered within two days. In other words, this could be the chance to add a rising e-commerce company to your portfolio. Newegg is established — cutting the risk — but has real long-term growth potential.
NEGG Stock and E-Commerce
NEGG stock may only have been traded since May 20, but Newegg is a long-established company with a proven business model. This is no e-commerce startup looking to find a new niche or undercut the big players.
Newegg has around 36 million registered customers. In addition, it has 610,000 registered business clients, including government agencies, healthcare providers, and businesses of various sizes. Collectively, customers spent $2.1 billion in 2020, with the company projecting that spending to hit $2.25 billion for this year.
The company has expanded its infrastructure to support its growth — and to stay competitive with other electronics retailers that have built out their online presence. In February, Newegg opened a new 275,000 square foot third-party logistics facility in California.
Newegg has also been a leader in accepting Bitcoin (CCC:BTC-USD) as payment. This began on its U.S. site in 2014, followed by Canada. In 2019 it was expanded to 73 additional countries where Newegg operates. Accepting Bitcoin was yet another reason why many tech-savvy customers preferred to shop online at Newegg.
Expanding Its Services, and Its Customer Base
Newegg hasn’t been sitting still. Recognizing that there is demand for products beyond its core PC and consumer electronics focus, the company founded Newegg Marketplace in 2011. It has since grown with home, lifestyle, clothing and other categories that make the company better able to compete against e-commerce giants.
In 2020, Newegg became the first major e-commerce company to offer customers the option of browsing in dark mode. That sounds like a small thing — it’s a matter of inverting the traditional display to show light text on a dark background — but people who spend a lot on PCs and accessories like dark mode. That’s why all the major operating systems have added dark mode support over the past few years.
One of the latest spikes in NEGG stock was based on news that the company had stock of hot new NVIDIA (NASDAQ:NVDA) GeForce RTX 30 series video cards. In addition, the company announced that with its in-stock supply of PC components (including those elusive graphics processing units), it would start selling custom-configured PCs.
Newegg never loses sight of its core customers, and many of its moves are aimed directly at them. However, the company is also moving to attract online shoppers in general. It’s a tough balancing act, but one that this company is providing to be adept at.
Bottom Line on NEGG Stock
While NEGG stock earns an “A” rating in Portfolio Grader, one of the knocks against the company is a lack of interest among investment analysts. CNN Business has only one analyst on record. They have NEGG rated as “Outperform” with a $44 price target, a 117% upside.
Based on its established and proven business model (with millions of loyal customers and solid fulfillment center coverage), and its low-risk service expansions (through the adoption of a third party marketplace and custom PC builds), it’s easy to see Newegg being on a long-term growth trajectory. Online shopping may slip in popularity as the pandemic fades, but Newegg was a going concern long before the pandemic. It’s going to continue to be a top choice for shoppers who preferred it over big box electronics stores.
The biggest risk right now is short term price volatility. Being a meme stock means having to weather huge spikes and rapid declines. If you can live with that volatility, the current price of NEGG stock makes it well worth considering.
On the date of publication, Louis Navellier had a long position in NVDA. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
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