ContextLogic Inc. (WISH - Get Rating) is a mobile e-commerce company in Europe, North America, South America, and internationally. The company operates Wish, an e-commerce platform that connects users to merchants.

On October 6, 2022, WISH announced its partnership with eDesk, the e-commerce customer support platform, to empower WISH merchants with more resources and tools for enabling excellent customer support experiences.

WISH’s forward Price/Sales of 0.72x is 6.4% lower than the industry average of 0.77x. Its forward Price/Book of 1.15x is 50.9% lower than the industry average of 2.34x.

However, WISH has lost 40.2% over the past month to close the last trading session at $0.77. It has lost 75.2% year-to-date and 84.6% over the past year. It is trading near its 52-week low of $0.70, which it hit on October 3, 2022.

Here is what could shape WISH’s performance in the near term:

Weak Financials

For the second quarter that ended June 30, 2022, WISH’s revenue came in at $134 million, down 79.6% year-over-year. Its gross profit came in at $42 million, down 89.1% year-over-year. Moreover, its cash and cash equivalents came in at $693 million for the period ended June 30, 2022, compared to $1.01 billion for the period ended December 31, 2021.

Negative Profit Margins

WISH’s trailing-12-month EBITDA and net income margins of negative 26.53% and 27.76% are lower than the industry averages of 11.25% and 5.69%. Its trailing-12-month ROCE, ROTC, and ROTA of negative 35.23%, 20.81%, and 24.46%, compared with the industry averages of 14.91%, 6.88%, and 5.12%, respectively.

Mixed Analysts’ Expectations

WISH’s revenue is estimated to increase 72% year-over-year to $1.23 billion in 2023. However, analysts expect WISH’s revenue to decrease 17.9% year-over-year to $237.28 million for the quarter ending December 2022 and 65.6% year-over-year to $716.27 million in 2022.

WISH’s EPS is estimated to grow marginally year-over-year in 2023. However, analysts expect WISH’s EPS to decline 100% year-over-year to negative $0.20 for the quarter ending September 2022, while it’s expected to fall 177.8% year-over-year to negative $0.25 for the quarter ending December 2022.

Moreover, WISH’s EPS is estimated to decrease 14% year-over-year to a negative $0.65 in 2022.

POWR Ratings Reflect Bleak Prospects

WISH has an overall rating of D, equating to Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

WISH has a D grade for Quality, consistent with its negative profitability margins. It has a C grade for Sentiment. Mixed analysts’ sentiments around the stock justify this grade.

In the 63-stock Internet industry, WISH is ranked #52. The industry is rated F.

Click here for the additional POWR Ratings for WISH (Growth, Value, Momentum, and Stability).

View all the top stocks in the Internet industry here.

Bottom Line

WISH registered a weak performance in its last reported quarter. And considering its negative profit margins and bleak EPS growth expectations, I think WISH might be best avoided now.

How Does ContextLogic Inc. (WISH) Stack Up Against its Peers?

While WISH has an overall POWR Rating of D, one might consider looking at its industry peers, trivago N.V. (TRVG - Get Rating), Yelp Inc. (YELP - Get Rating), and Expedia Group, Inc. (EXPE - Get Rating), which have an overall B (Buy) rating.

WISH shares were trading at $0.79 per share on Tuesday afternoon, up $0.02 (+2.46%). Year-to-date, WISH has declined -74.60%, versus a -23.16% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...

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