Here's Why Newegg Shares Crashed in September
Shares of Newegg Commerce (NASDAQ: NEGG) fell 26.8% in September 2021, according to data from S&P Global Market Intelligence. The e-commerce veteran entered last month on a full head of steam but found it hard to keep the good times rolling. Newegg's first earnings report as a publicly traded company provided no support for the stock amid a market-wide retreat from this type of high-priced growth stock.
In the first half of 2021, Newegg saw net sales rise 40% year over year to $1.2 billion. Net income increased by 14% to $22 million. The company had 4.2 million active customers as of June 30.
These six-month figures placed Newegg's stock at the lofty valuation ratio of 194 times annualized earnings. Hence, the stock was set up to fall when investors started retreating from high-priced tickers in September. At the same time, the shares traded at just 3.2 times projected full-year sales, leaving investors confused. Is Newegg a pricey growth ticker or a sober value investment? In the end, Mr. Market decided to play it safe and drive Newegg's stock prices lower.
Source Fool.com
