Why Is Newegg (NEGG) Stock Up Today?

In recent weeks, the rapid increases in short-squeeze stocks have gotten investors excited again. After all, speculation can be fun, especially when you’re winning. In particular, fans of Newegg (NASDAQ:NEGG) are likely feeling lucky today. Right now, NEGG stock is up more than 25% on very heavy volume.

A magnifying glass zooms in on the website for Newegg (NEGG)
Source: OleksandrShnuryk / Shutterstock.com

Newegg has been a popular short-squeeze target for retail investors in the past. The company’s e-commerce business model promises potentially sky-high future growth. What’s not to like about an up-and-coming e-commerce player in this environment, right?

Well, a variety of headwinds have hampered Newegg lately. The company has ties to China, which has been beaten up hard in the market over the past year. Furthermore, rising interest rates have the potential to devalue future earnings for high-growth names like NEGG. Plus, sentiment toward speculative equities has decreased considerably from last year’s peak.

Still, there’s a reason enthusiasm is returning to NEGG stock. Let’s dive into what’s driving shares higher today.

Speculative Momentum Is Driving NEGG Stock Higher

Today, investors appear to be in bullish mode for Newegg once again. In fact, this week has been very positive for NEGG stock thus far. Shares of the $3 billion company have surged more than 30% since Friday’s close.

Some of this positive momentum has to do with Newegg rejoining a list of top short-squeeze opportunities. The company was listed by Fintel as the third place potential short-squeeze candidate for the week. Newegg’s high short interest (23.4%) and borrow fee rate are key drivers behind this perspective.

Additionally, the social media momentum around Newegg has remained strong. Investors appear to be bullish on the idea that the rally in NEGG stock may only be starting. Accordingly, the conditions for a squeeze appear to be in place.

For now, I’ll be keeping an eye on Newegg safely from the sidelines. However, it will undoubtedly be fun to watch from here.

On the date of publication, Chris MacDonald did not hold (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.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.


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