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Finance

‘WISH’ Not Fulfilled, Reddit & WallStreetBets Smash ContextLogic Stock

ContextLogic, which is the parent company of e-commerce platform WISH, released its second-quarter earnings on Aug. 12. The performance was below par on almost all metrics. Traders on the WallStreetBets subreddit are getting increasingly disenchanted with the stock as it looks set to hit a new record low on Aug. 13.

While Reddit traders had initially pumped the stock and triggered a short squeeze, bears have been winning the argument lately. Although short squeezes can be a short-term price driver, ultimately a company has to justify the price action with its earnings.

WISH reported dismal earnings in Q2.

While e-commerce companies including Alibaba, Amazon, and Coupang also fell after their recent earnings, there was at least something to celebrate in their reporting. For WISH, on the other hand, it is hard to find a silver lining.

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The company’s revenues fell 6 percent YoY to $656 million. While other e-commerce companies are witnessing a growth slowdown, WISH is witnessing degrowth. Not only did ContextLogic’s revenues fall but the company’s net losses increased tenfold from $11 million to $111 million on higher costs.

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The operating performance failed to instill confidence either. User retention fell in the quarter while the despite the company’s expectation it would increase due to “more reliable logistics.” Daily user activity and active buyers also fell for the company in the quarter. While WISH apportioned at least some of the blame on tougher YoY comps, the argument does not hold much weight.

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WISH saw a 13 percent fall in app installs and a 15 percent fall in average time spent on the app in the second quarter. The comparisons are sequential so the tough YoY comps argument does not apply here. The company also talked about higher advertising costs on Android after Apple App store implemented privacy changes.


View more information: https://marketrealist.com/p/wish-stock-reddit-wallstreetbets/

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