Newegg is Cracking
NEGG
Shares of this $1 bln company, which sells electronics online, have soared based on a perfect storm comprising a low-float share structure, a massive short squeeze, and the peak of the meme-stock era. Now at around $50, NEGG shares traded at $128.09 in mid-August 2025, up from $3.50 two and a half months earlier. The meme that caught the public imagination was Newegg’s gaming cachet: it sells Nvidia chips and last summer opened a physical and virtual gaming space. In reality, Newegg Commerce is a humble seller of electronics online with declining turnover and revenue, while the electronics ecommerce market itself has been expanding, indicating a significant loss of market share.
The air has seeped out of this meme stock, but more is to come, because like it or not, there could be a forced sale of shares. On January 20, 2026, Newegg disclosed that its chairman and chief shareholder had been detained. The company has not said why he was detained, but the chairman, He Zhitao, had pledged all of his equity, worth about 53% of NEGG’s common shares as of October 2025[1], for loans of which at least $190 mln were in default as of the last disclosure. We think this detention could be a catalyst that leads to a block of NEGG shares being sold in the market at a sharp discount.
From an operational perspective, NEGG is a weakening ecommerce company that has not made money in five years and whose Gross Merchandise Value has dropped from the $3 bln of the 2021 glory days to between $1.69-$1.75 bln in 2025. The number of SKUs offered has collapsed, and there are now a scant 1.1 mln active customers, compared with 4.7 mln customers in 2020.
