That Short NEGG 'ing Feeling

Most would not attribute July as a time to be surrounded by techy goodness. Why would you when the air is so nice, the birds are chirping and the smell of cookouts permeates the air? But, in 2021 the pandemic created favor in Zoom meetings as opposed to face-to-face gatherings. One retail stock still demanded a fireworks display for all, though.

Newegg Commerce Inc. NEGG had acquired a reverse merger deal in 2020. As word spread, retail traders began to look at the fundamental data behind NEGG. When the short interest was revealed, a legion of “Apes” (Retail trader’s self-identification slang) started accumulating shares in an effort to do one of the tasks they enjoy most – punishing short sellers.

As the shares became less and less readily available, the price per stock shot straight up and into the bright morning sky. With $11 being the approximate value of ground level, the stock accelerated past $20. Then $30. Next was $40. And $50 – on and on, it seemed to be devoid of jet fuel limits.

Stock options were tripping over each other as prices compounded. Volume was outrageous. And so was the acceleration of the share sell-off. The teens were quickly reached again. For those who were able to get in low and out high, the profits were stunning. If you were not so lucky, then you would be a “bagholder” who now had to be very long on the equity in hopes of regaining the lost value.

While real-time numbers constantly change, at the moment of writing this article, $NEGG is bouncing between 0-15,000 shares remaining. The number of shares short? 1,900,000. Cost to borrow is around 70%, but it too has been higher. Keeping up is a task as the market is seeing one of the largest one-day drops in years.

The author does rotate holdings of  $NEGG– and currently does hold – positions in the stock.

Posted In: contributorsSmall CapTrading Ideas