ContextLogic Inc. (WISH
) is a San Francisco-based company that operates the popular e-commerce platform, Wish. Founded in 2010 by Peter Szulczewski and Danny Zhang, Wish has quickly become one of the largest and fastest-growing e-commerce companies in the world, with over 100 million monthly active users in more than 100 countries.
The company's mission is to make shopping more fun and affordable for everyone by providing an easy-to-use mobile app that connects consumers directly with manufacturers and merchants around the world. Through its platform, Wish offers a wide range of products at discounted prices, including electronics, fashion, home goods, and beauty products.
One of the key reasons why I believe buying WISH stock is a smart investment is because of the company's impressive growth potential. Wish's user base has grown exponentially over the years, and the company has demonstrated its ability to scale its operations and expand into new markets. As of 2021, Wish had a market cap of over $10 billion, making it one of the largest e-commerce companies in the world at the time.
Now if you take a look at the stock chart since it went public you can see that the market has very much disagreed with that valuation. As of today the market cap is about $370 million.
Therein lies opportunity (maybe).
Wish does have a number of strategic advantages that position it well for future success. For example, the company's direct-to-consumer business model allows it to offer products at lower prices than traditional retailers, which is a major selling point for budget-conscious consumers. Additionally, Wish's platform is highly personalized, using data-driven algorithms to recommend products to users based on their browsing and purchase history.
Looking ahead, there are several factors that could further drive growth for Wish and its investors. One of the most important of these is the ongoing shift towards e-commerce, which has only accelerated in the wake of the pandemic. As more consumers turn to online shopping, Wish is well-positioned to benefit from this trend and capture a larger share of the global e-commerce market.
Another potential growth driver for Wish is the company's expansion into new markets. In recent years, the company has made significant investments in international markets, including India, where it has partnered with local retailers to offer a range of products at discounted prices. If Wish can successfully penetrate these new markets and gain traction with local consumers, it could unlock significant growth opportunities for the company and its investors.
OK, so honestly I don't really think this stock is a good long-term play.
Why is that you ask? Well, for starters their growth has really stalled in the last year or so with pretty steep declines in revenue and they continue to show losses.
The sequential drop in revenue is concerning to me. Their sales are probably pretty seasonal, but there has been a year/year drop as well.
Also, they have a lot of shares out at 673 million. And the available borrow and fee rate are such that they're easily manipulated by short sellers.
One bright spot I see for a potential trade is their cash level and compliance requirements for listing on Nasdaq. As of their latest SEC filing they have $587 million in cash or about $0.87/share. The stock last traded at $0.50. The company also has a pretty strong incentive to get the share price back over a dollar to stay listed on Nasdaq.
These last things really are the strongest reasons in my opinion to consider a long position here. WISH
is a risky proposition indeed.