Wish ranks among the top five shopping apps in multiple countries.
While 2020 was a spectacular year for initial public offerings, some deals were hotter than others.
While companies like DoorDash (ticker: DASH) Airbnb (ABNB), C3.ai (AI), and Snowflake (SNOW) had monster debuts, rallying sharply from their opening trades, that wasn’t the case for ContextLogic (WISH). The online deep-discount retailer, which operates under the brand name Wish.com, has been under pressure since it went public in mid-December at $24 a share.
ContextLogic’s stock peaked on an intraday basis at $24.75 a couple of days after the offering, but has never closed as high as the IPO price. The stock was down 3.5%, to $19.64 on Monday afternoon.
Wish has over 500,000 sellers, most of them in China. With over 100 million monthly active users in more than 100 countries. it ranks among the top five shopping apps in multiple national markets.
The post-IPO quiet period has expired, so nearly a dozen analysts picked up coverage of ContextLogic’s shares on Monday. Seven rate the stock at Buy, or the equivalent, while four rate it at Hold, or Neutral.
The bulls on the company see a strong mobile e-commerce play. UBS analyst Eric Sheridan, for instance, gave the stock a Buy rating and set a target of $28 for the share price. He says the company stands to benefit from several factors, including accelerating adoption of mobile commerce, and can be a play on emerging economies and cross-border transactions. He sees a target market of about 780 million households—those with internet access but household income under $75,000.
Oppenheimer analyst Jason Helfstein is bullish, as well. He set an Outperform rating and $30 target on the stock. “The company is well positioned as a leading value-oriented marketplace to benefit from the secular shift toward e-commerce for discount retailers,” he writes. “The relative under-penetration of eCommerce in discount channels can yield outsized momentum and greater potential for multiple expansion vs. other Internet marketplaces in verticals that are already further adopted.”
J.P. Morgan’s Doug Anmuth began coverage with an Overweight rating and $30 target. “Wish targets an underserved market, catering to value-conscious buyers, many with annual household income below $75,000, through affordable and mostly unbranded products,” he writes. The company has less than 1% of the global mobile e-commerce market.
Stifel analyst Scott Devitt has a more cautious view, giving the stock a a Hold rating and $22 target, a little below the IPO price. “Shares have fallen below the initial offering price of $24 and currently trade at a discount to the peer group as debates surrounding the issues of profitability, China-related risk, and the user experience and its long-term impact to growth are still to play out,” he writes. “While Wish possesses many of the attributes we appreciate in a global marketplace, we hold a neutral view while the current debates have yet to be resolved.”
In December, the company sold 46 million shares at $24 each, the upper edge of the range of $22 to $24 it had told investors to expect. Underwriters included Goldman Sachs, JPMorgan Chase, and BofA Securities.
Conversation Comments
Ale Carson 11 January, 2021
Amazon has already become the storefront for innumerable Chinese sellers, especially for higher value-added items. It would seem Wish.com's "opportunity" is to be an online closeout/job lot type of operation, selling low-priced items to a value-conscious crowd - without the inbuilt logistical expertise of Amazon. Not very investable IMO.
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