Wish stock prices are up significantly from their recent lows. The company is an American online e-commerce company. Wish was founded in 2010 by Piotr Szulczewski and Danny Zhang. They plan to use their e-commerce business to sell clothing, jewelry, and household goods. Currently, they have around 260 million active users.
While Wish stock is a good investment opportunity, it may not be for the long-term. Its recent quarterly results were among the worst for a publicly traded retailer in recent history. In Q3 ’21, its revenues declined by 79% to $134 million, while its gross profit margins fell from 59% to 31%. It also failed to grow its base of monthly active users, which dropped by two-thirds from 90 million to 23 million. Further, Wish had to spend enormous amounts of money on marketing in 2020 and 2021 to acquire new customers. When it cut its promotional budget, customers didn’t stick around.
Despite the growing popularity of the Wish platform, it has been hard to keep its momentum. It continues to lose users and record revenue losses as it struggles to fix serious problems with the consumer experience and delivery times. The stock has been hit hard already, but further downside risk is unlikely. The company is a good buy at the current price, with a large cash position.
In addition to falling revenue, Wish’s debt-to-equity ratio has put it in an unfavorable position. It may also be hard for the company to secure favorable rates in this market. As a result, Wish shares are trading at a less than 1x multiple of sales. This could cause the company to ramp up its marketing costs, accelerating its losses.