This is Why Wish has Dropped 29% in Just Two Days

Wish, an American online e-commerce platform that facilitates transactions between sellers and buyers, has seen its share price drop 29% in the last two days and as much as 80% since January.

It was last week that the company’s CEO Peter Szulczewski opened his shareholder letter that created concerns among investors.

After a strong start to the second quarter of 2021, demand slowed due to a number of headwinds,” Szulczewski wrote in the first sentence of the letter published last Thursday. The letter had been published along with the company’s financial results.

Wish shares sank 20% on Friday and continued sliding on Monday, dropping another 9% to close at $6.87. The company had made its Wall Street debut at $24 a share in December and traded as high on $31.19 on Feb. 1

In its earnings report, Wish revealed a 6.4% drop in quarterly revenue from a year earlier to $656 million, while analysts expected a slight increase. Its net loss grew by tenfold to $111 million, and monthly active users (MAUs) dropped 22% to 90 million.

Wish cited the disappointing sales figures to the reopening of the economy and a return to physical shopping.

“From a macro perspective, as vaccine rates increased, stay-at-home orders began to ease, and economies started to more broadly reopen around the world, daily user activity and active buyers on our platform declined more than we had anticipated, particularly in the U.S., France and Italy — three of our largest markets,” wrote the CEO.

App installs dropped 13% from the prior quarter and average time spent on the app plummeted 15%, Wish announced.

That resulted in a 29% drop in marketplace revenue from a year earlier. Some of those losses were offset by its logistics business, which grew 126%.

Analysts at William Blair downgraded the stock to the equivalent of a hold rating last week.

“Since its IPO, reported results have missed Street expectations (and our model) across key engagement metrics (i.e., MAUs) for three consecutive quarters,” the analysts wrote. “Given both macroeconomic headwinds and company-specific headwinds specific to user engagement and retention, we do not have good visibility into our forecast.”

“We do not expect these new initiatives to contribute meaningfully to positive year-over-year results before the second half of 2022,” Szulczewski had wrote.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.