ContextLogic (WISH) is a worldwide commerce firm that owns and operates the wish.com online store and related mobile apps all over the world.
Despite the fact that demand surged during the lockdown, retail shop reopenings harmed the company’s sales in 2021, limiting its top-line growth.
Further, along with a global fall in e-commerce traffic owing to the ease of lockdowns, the firm was plagued by major internal issues, resulting in massive customer losses. The recent withdrawal of the WISH app from Google’s (GOOGL) and Apple’s (AAPL) respective French app stores, due to quality control concerns about WISH’s products, was a major setback for ContextLogic’s brand and image.
As a result, the market share has dropped about 90% in the last year.
Let’s take a closer look at what’s in store for ContextLogic in 2022.
Website Traffic Trends Downwards
As an online retail company, the volume of visitors that visits the site has a significant impact on the bottom line. The TipRanks internet traffic analysis reveals that ContextLogic’s website traffic is showing a downward trend.
When we looked at the statistics more closely, WISH showed a 30% drop in traffic from unique visitors in December compared to November, on a global scale.
This indicates that user numbers may fall in the fourth quarter of 2021. In fact, in the most recent reported third quarter, monthly active users (MAUs) fell 40% year-over-year to 60 million, which is quite disappointing.
A Slightly Doomsday Picture Ahead
In addition to internet traffic remaining low, the stock’s TipRanks SmartScore, which takes into account eight different data sets, indicates that it is likely to underperform market expectations.
Furthermore, TipRanks’ Stock Investors tool reveals that investors are pessimistic about ContextLogic stock. According to the tool, 6.7% of investors holding portfolios on TipRanks have cut their holdings in WISH stock in the previous 30 days. In addition, 0.3% of these individuals have cut their holdings in the last week.
We are once again concerned about the company’s capacity to become profitable in the near future, due to its dismal financials. Looking at the upcoming WISH earnings for the fourth quarter of 2021 on March 7, the company expects to report a net loss of $0.07 per share. Moreover, despite the Christmas season, management anticipates Q4 sales to be lower than Q3.
Wall Street’s Take
Last month, UBS analyst Kunal Madhukar downgraded the stock from Buy to Neutral with a $4 price target.
ContextLogic’s revenue, according to Madhukar, continues to decline. While Wall Street anticipates a stronger year in 2022 than in 2021, the analyst feels “this is too optimistic,” given the projection for increased expenditure in the second half of 2022. Despite this, he anticipates ContextLogic’s revenue to grow at an annual pace of 8% through 2025.
The rest of the TipRanks analysts are likewise wary of ContextLogic stock. WISH stock has a Hold consensus rating, based on 4 Hold and 1 Sell ratings. As for price targets, the average WISH stock price prediction of $4.70 implies almost 90.3% upside potential from the current levels.
Bottom Line
While investors are losing faith in ContextLogic, it is making attempts to improve client retention through new and inventive offerings. The company is providing cash incentives to recruit high-quality vendors. In addition, the firm built its own unique logistics network to help reduce delivery delays and improve logistical lead times.
So, only time will tell if the company’s actions will reclaim investors’ trust, resulting in a stock price increase this year.
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