Wish stock, formally known as ContextLogic (NASDAQ: WISH), has been on a wild ride since its IPO in December 2020. The e-commerce company quickly became a meme stock darling but has since cratered back down as its business fundamentals failed to impress investors. As we move into 2023, Wish faces an uncertain future. Here’s what investors need to know about this volatile stock.
A Promising Start as a Pandemic Favorite
When Wish went public in late 2020, it became a Wall Street darling. The company ran a budget-friendly e-commerce marketplace and benefitted tremendously from the e-commerce boom catalyzed by the COVID-19 pandemic.
Wish shares started trading on the Nasdaq at $24 and initially surged to as high as $32 within its first few days. For the first half of 2021, the stock continued climbing to over $30 per share. Investors eagerly jumped aboard what looked like a promising pandemic growth story.
Meme Frenzy Adds Fuel to the Fire
The early 2021 meme stock craze added rocket fuel to Wish’s hot momentum. The company found itself lumped in with GameStop, AMC, and other speculative darlings of retail traders gathering on Reddit’s WallStreetBets forum.
The social media hype surrounding Wish stock hit a fever pitch in June 2021, when shares briefly eclipsed $30. Wish became one of the most talked about stocks on Reddit and Twitter for a while. However, this meme frenzy did not last long.
Troubling Fundamentals Emerge
Wish’s underlying business performance took center stage as the meme craze dissipated. And the results could have been more pretty.
The company’s monthly active user (MAU) growth stalled while poor user reviews piled up online. Logistics and shipping problems emerged as major complaints among Wish customers.
These issues impacted the company’s revenue, which has declined year-over-year for multiple straight quarters. Wish’s Q3 2021 revenue tumbled 39% compared to Q3 2020. Its Q4 2021 revenue plummeted another 22%.
Share Price Crashes in Late 2021
Investors rapidly soured on the stock as Wish’s weak fundamentals came into focus. Shares plunged in the second half of 2021, giving up all its pandemic-fueled gains.
From its June peak above $30, Wish stock crashed to below $5 per share by the end of 2021. As investors capitulated, the company lost over 80% of its value in just six months.
Operational Improvements Provide Some Hope
Heading into 2023, Wish strives to turn itself around after a disastrous 2021. The company hired a new CEO, Vijay Talwar, in early 2022. Talwar aims to improve Wish’s shipping times, optimize costs, and provide a better user experience.
There are some promising signs on this front. Wish reduced its shipping times by 55% in 2022. It also cut marketing expenses by 80% to rein in costs. User reviews have steadily improved over the past year as well.
These operational fixes may position Wish for a return to revenue growth in 2023. After the stock’s massive decline, any fundamental improvements could spark a robust rebound.
Plenty of Risks Remain
However, investors should keep in mind there are still abundant risks facing Wish. The company operates in an ultra-competitive space dominated by Amazon and Walmart.
Wish is also carrying high debt loads while burning through cash. Its balance sheet raises going-concern risks if Wish cannot return to consistent profitability.
On top of that, a potential recession in 2023 does not bode well for a discount retailer relying on discretionary consumer spending. The path ahead remains murky.
Key Takeaways for Wish Investors
Here are some key takeaways for investors considering Wish stock:
- Strong early pandemic growth quickly reversed as fundamentals eroded in 2021
- Meme stock mania added volatility but failed to sustain Wish’s share price
- New management aims to improve logistics, costs, and the user experience
- Signs of operational progress provide some reason for optimism
- But risks remain elevated given the intense competition and a challenging macro environment
In summary, Wish has potential upside if its turnaround gains traction, but the stock remains high-risk given still-uncertain prospects. Expect plenty more volatility in Wish shares through 2023.
5 FAQs About Wish Stock
1. Is Wish Stock a good buy for 2023?
Wish stock could rebound in 2023 if the company’s operational fixes result in renewed user and revenue growth. But it is still a very speculative investment, given Wish’s overall challenges.
2. Does Wish stock pay a dividend?
No, Wish does not pay a dividend. The company is currently unprofitable and focused on reinvesting to grow the business.
3. What is Wish’s IPO stock price?
Wish priced its IPO at $24 per share in December 2020. The stock briefly hit $32 in its first weeks of trading.
4. Why did Wish stock crash?
Wish initially soared due to pandemic e-commerce tailwinds. But troubling fundamentals like declining users, revenue, and reviews caused the stock to crater over 80% from its peak.
5. Is Wish a Chinese company?
No, Wish is based in San Francisco. Its marketplace connects Chinese merchants with customers all over the world.
In Conclusion
Wish captured lightning in a bottle during the pandemic e-commerce boom but failed to sustain that momentum as its operational struggles emerged. The stock has been on a wild rollercoaster ride as a result. While the company tries to right the ship under new leadership, risks remain plentiful for Wish in the competitive e-commerce industry. Its fate likely hinges on the successful execution of its turnaround strategy in 2023. Investors should brace for continued volatility if they bet on this former high flyer.
