Newegg stock crashes after controlling shareholder chairman detained by Chinese authorities

[midian182]

Ripple effect: Newegg's stock took a hit this week after the online PC retailer revealed the chairman of its controlling shareholder has been detained by Chinese anti-corruption authorities. Unsurprisingly, the news sparked a sell-off, though the share price has since rebounded.

Newegg said in a January 21 regulatory filing that it was notified by the family of He Zhitao. He is the chairman and CEO of Hangzhou Lianluo Interactive Information Technology, Newegg's largest shareholder with a 54.5% stake.

According to the filing, He is being investigated and detained by the Haibei Prefecture Supervisory Commission on matters described as "personal." The company did not provide details on the nature or scope of the investigation.

Despite Newegg's assurance that day-to-day operations remain normal, the market reacted: shares closed down approximately 17.7%, shedding about $9.79 per share as investors fled amid uncertainty. However, the stock price has since rebounded to a level similar to where it traded before the filing.

Newegg's share price over the last month

Newegg's filing emphasized that the company's board is functioning and its e-commerce business continues uninterrupted. But investors tend to dislike uncertainty around leadership, especially when it involves legal action in jurisdictions with opaque regulatory rules, such as China.

The share price drop has attracted the attention of multiple securities law firms, which are now soliciting investors who suffered losses to explore potential legal claims under federal securities laws. According to filings circulating on financial news sites, plaintiffs may argue that Newegg failed to adequately disclose risks tied to its governance and controlling shareholder dynamics.

Newegg was once a beloved destination for PC enthusiasts, known for deep parts catalogs and community-driven reviews. But over the past decade, the company has shifted under foreign ownership and expanded into a broader marketplace model – a transformation that has split opinion within its core audience and drawn criticism over quality control and customer trust.

For now, Newegg's leadership insists that its retail and marketplace operations are unaffected, and that compliance with all applicable laws remains a priority. Whether that message will be enough to appease wary investors eyeing potential risks remains to be seen.

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Newegg stock crashes after controlling shareholder chairman detained by Chinese authorities

 

[NumberNine]

Like most things driven by the impossible need for constant growth, Newegg is a shadow of its former glory, surviving on the memory of the brand.

 

[Neatfeatguy]

Years and years ago Newegg, Tigerdirect and one other website (name eludes me) were my go to spots for buying new computer hardware. Nowadays Newegg is the last resort for my computer stuff.

When I learned of GameMax's Titan Silent 2 tower I wanted one. For months I'd check GameMax website for availability in the states and it would only take you to newegg, but this particular tower never showed up for sale there.....until one day it finally did and because Newegg was the only place that sold it, I purchased it from them. The case didn't live a very long life on Newegg, only maybe 4-5 months before it wasn't restocked.

Otherwise I find local stores I can purchase from - 99% of my computer related purchases come from the local Micro Center store. I can drive there, get my hands on the item(s) I'm looking for and they can even test things for me before I walk out the door because it sucks buying something new and it doesn't work when you try it at home, so you're shipping it back for a replacement or driving back to the store.

 

[godrilla]

Years and years ago Newegg, Tigerdirect and one other website (name eludes me) were my go to spots for buying new computer hardware. Nowadays Newegg is the last resort for my computer stuff.

When I learned of GameMax's Titan Silent 2 tower I wanted one. For months I'd check GameMax website for availability in the states and it would only take you to newegg, but this particular tower never showed up for sale there.....until one day it finally did and because Newegg was the only place that sold it, I purchased it from them. The case didn't live a very long life on Newegg, only maybe 4-5 months before it wasn't restocked.

Otherwise I find local stores I can purchase from - 99% of my computer related purchases come from the local Micro Center store. I can drive there, get my hands on the item(s) I'm looking for and they can even test things for me before I walk out the door because it sucks buying something new and it doesn't work when you try it at home, so you're shipping it back for a replacement or driving back to the store.

Mwave I believe was the other website. I bought graphics cards from them as well.

 

[m3diapers]

Years and years ago Newegg, Tigerdirect and one other website (name eludes me) were my go to spots for buying new computer hardware. Nowadays Newegg is the last resort for my computer stuff.

When I learned of GameMax's Titan Silent 2 tower I wanted one. For months I'd check GameMax website for availability in the states and it would only take you to newegg, but this particular tower never showed up for sale there.....until one day it finally did and because Newegg was the only place that sold it, I purchased it from them. The case didn't live a very long life on Newegg, only maybe 4-5 months before it wasn't restocked.

Otherwise I find local stores I can purchase from - 99% of my computer related purchases come from the local Micro Center store. I can drive there, get my hands on the item(s) I'm looking for and they can even test things for me before I walk out the door because it sucks buying something new and it doesn't work when you try it at home, so you're shipping it back for a replacement or driving back to the store.

Bought a lot PC components from Tigerdirect when there was no salestax for onlineshopping and California was affordable...Democrats really hate good economy-nothing good last in California

 

[VaginaWhisperer]

Newegg has been trash for a long time, do not buy there, they have horrible customer support and return policies, not to mention last time I ordered something there, there was no way to cancel the order after you made it, except calling them, online support, just a real trash site.

 

[brucek]

I wonder if Newegg screwed over the wrong customer...

 

[mi1stormilst]

Newegg.com has been dead to me since 2015...almost like no news at all /-:

 

[daffy duck]

Trash seller these days. Newegg Australia is a sad sick joke of an online store.

 

[DrSuess]

Stopped using Newegg when I started using free shipping with Amazon.

 

[Hotlynx16]

Years and years ago Newegg, Tigerdirect and one other website (name eludes me) were my go to spots for buying new computer hardware. Nowadays Newegg is the last resort for my computer stuff.

When I learned of GameMax's Titan Silent 2 tower I wanted one. For months I'd check GameMax website for availability in the states and it would only take you to newegg, but this particular tower never showed up for sale there.....until one day it finally did and because Newegg was the only place that sold it, I purchased it from them. The case didn't live a very long life on Newegg, only maybe 4-5 months before it wasn't restocked.

Otherwise I find local stores I can purchase from - 99% of my computer related purchases come from the local Micro Center store. I can drive there, get my hands on the item(s) I'm looking for and they can even test things for me before I walk out the door because it sucks buying something new and it doesn't work when you try it at home, so you're shipping it back for a replacement or driving back to the store.

True New Egg used to have great deals but now days it is higher than Amazon!! Sadly it is a 140 miles to my nearest Micro Center store!