Founded in January 2001, California-based electronics and computer parts e-commerce company Newegg (NASDAQ:NEGG) didn’t attract a great deal of attention among investors until recently. Surprisingly, 20 years after the company’s inception, NEGG stock suddenly had the spotlight shone upon it by the trading community.
As the company readily acknowledges, Newegg has built a cult following of personal computer (PC) and do-it-yourself (DIY) enthusiasts.
But don’t get the wrong impression — Newegg has grown into a sizable tech-focused e-retailer. Today, the company has a market presence in North America, Europe, South America, Asia Pacific and the Middle East.
And with a recently commenced foray into a high-conviction PC sub-market, Newegg’s reach could actually expand even further.
NEGG Stock at a Glance
Suffice it to say that NEGG stock undoubtedly surprised a lot of traders this year. The shares were available for $4 and change at the beginning of 2021, but that situation would change drastically.
The buyers pushed the share price upwards from January through June, until it reached almost $11 on June 29. That already represented a significant increase, but the biggest gains were actually yet to come.
In a stunning move, NEGG stock blasted to a 52-week high of $79.07 on July 7. However, any immediate hopes of reaching $100 were denied.
If you didn’t buy shares near the top, then you may be able to invest in Newegg at a reduced price point. As of July 13, the stock had declined to $31.74.
In any case, we now know how far NEGG stock can run when the bulls are in control of it. Conceivably, the price could move much higher from here.
Social Media Goes Wild
So, there’s an 800-pound gorilla in the room and there’s no way to avoid addressing it.
Thankfully, InvestorPlace contributor Brenden Rearick provided a timely update which summed up the situation concisely. “Social media is running rampant with posts proclaiming NEGG as the next moonshot,” Rearick observed.
This was reported in early July, around the time when the stock was soaring. Rearick stated that it was “one of the highest stocks in terms of short volume,” which at the time was recorded at an eye-popping 31%.
Then, on July 12, Rearick again featured NEGG stock as a potential short squeeze target.
Once more, he cited a relevant statistic as the stock was “seeing a huge short interest, eclipsing 30% of the float.”
Here’s an example of the hyped-up sentiment surrounding Newegg. One social media user, not long ago, was spotted issuing a short-term share-price prediction of $100.
Certainly, it’s possible that NEGG stock could be the target of another short squeeze. These things are difficult to predict and time properly, though.
Building the Perfect PC
Perhaps it would be more sensible, then, to focus on what we know to be true, rather than what we’d like to see happen in the markets.
One thing that’s definitely true is that Newegg is making a serious move into the highly specialized, build-to-order PC market.
To that end, the company recently announced a new service in which Newegg will custom-assemble PCs for its customers.
As InvestorPlace contributor William White noted, Newegg “already has all the parts it needs on hand to build powerful gaming or editing PCs.”
This puts Newegg at an advantage in this niche market, as it means that the company should be able to produce custom PCs for its customers quickly.
Now, I understand that not everyone is going to relate to the idea of buying a customized PC.
It’s not for everybody, but for PC gamers who demand maximum gaming performance, Newegg’s new service should be right up their alley.
In light of all this, Newegg Director of Engineering Vishal Mane constructed a solid case for his company’s potential dominance of this narrow but essential market.
“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 BTO [build-to-order] service,” Mane clarified.
Is Newegg going to be a short squeeze target in the near future? The answer is elusive.
But then, this might not be the best question to ask. Focusing on Newegg as an investable company could actually be much more productive.
To that end, it’s fair to say that Newegg’s foray into the build-to-order PC market is a savvy move.
And that, beyond the short squeeze potential, is a valid reason to consider NEGG stock today.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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