Wish: How would this stock look in the long run?

The parent company of the E-commerce platform Wish, ContextLogic, has been a difficult stock to buy.
By: Millennium Capital Management
CENTRAL, Hong Kong - March 1, 2022 - PRLog -- Wish's stock dropped as did the number of monthly active users (MAUs), revenue growth slowed and the company continued to lose money. The company had logistical and quality control concerns, as well as the sudden resignation of its founder and CEO Piotr Szulczewski, along with regulatory headwinds in France and insider sales, all factors that contributed to the sell-off.

Wish had $1.2 billion in cash, cash equivalents and marketable securities at the end of the third quarter of 2021. This was down by 43% from $2.1 billion the previous year. In the first nine months of 2021, their net loss increased from $176 million to $303 million, a year-over-year increase. Wish's main goal in the near future will be to halt the bleeding. It has cut its marketing budget but it has increased its logistical spending and incentives for higher quality merchants. As revenue growth slows, we may see that balancing act become increasingly difficult.

Wish will also have to lessen its reliance on Chinese merchants for low cost goods. Its utter reliance on China is the source of many of its logistical and quality control concerns but it also distinguishes itself from regional E-commerce competitors by offering lower cost items. Wish's next CEO, who has yet to be selected, will be tasked with attracting more merchants from the United States, Europe and other regions while still keeping higher quality Chinese merchants.

Wish's future CEO will also have to immediately tackle the company's problems in France, where its mobile app was recently banned and its website was deleted from leading search engines due to suspicions of dangerous items. As a result of France's actions, other European nations which accounted for 47% of Wish's revenue in the first nine months of 2021, may follow suit, forcing the firm to put out the fire before it burns down its greatest market. If Wish is able to make headway on all of these fronts, it will almost certainly need to increase its marketing efforts in order to stabilize its MAUs, which have fallen from over 100 million at the time of its IPO to only 60 million in the most recent quarter.

However, experts still foresee a lot more suffering in the near future. If Wish's turnaround attempts pay off, they predict revenue to decrease 17% in 2021 and 16% in 2022 and maybe 34% in 2023. They also predict it to remain unprofitable until 2023 but that its net losses would eventually diminish.

You may also visit us at Millennium Capital Management (Hong Kong) Limited through our website https://millenniumcapitalmgmt.com

Joanne Suarez
Source:Millennium Capital Management
Tags:Millennium Capital Management
Location:Central - Hong Kong Island - Hong Kong
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Page Updated Last on: Aug 12, 2022
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