Stock Analysis & Ideas

WISH Stock: Cheap Enough to Outweigh the Risks?

I am bullish on ContextLogic (WISH) as it has solid growth potential, a very attractive-looking valuation multiple, general Wall Street bullishness, and substantial upside relative to its one-year price target.

Wish is a company operated by ContextLogic Inc. and headquartered in San Francisco, United States. The online e-commerce platform was built in 2010 to facilitate transactions between buyers and sellers. The company employs over 1,200 full-time individuals and a robust list of merchants who have listed their products on the platform.

Wish has eliminated the distributor fees for manufacturers and suppliers, bringing down the cost of selling products by a significant margin. The platform offers standard and express delivery services to prioritize both customer types, those who prefer cost savings over delivery time and vice versa.


Wish operates on a commission-based business model, bringing the marginal costs to an all-time low for several sellers. Its strong portfolio of brands and products has also given it vast competitive advantages. The platform has millions of products listed by retailers, wholesalers, and sellers, bringing infinite options to consumers on a single platform.

The total worth of the company was estimated at nearly $10 billion in 2018 (its market cap is now $1.3 billion). Since it first operated as an app for consumers’ wish lists and on a pay-per-click model, the company quickly expanded with firsthand consumer knowledge.

Recent Results

In Q4 2021, Wish’s total revenues reached $289 million, whereas the adjusted EBITDA was -$23 million. Additionally, the free cash flow was also in a negative balance of -$50 million. The company’s cash & cash equivalents, along with its marketable securities, totaled $1.2 billion. The gross profit of the company totaled $120 million, with the gross margin reaching 42%.

In the fiscal year that ended in December 2021, total revenues were $2.1 billion, and adjusted EBITDA reached -$199 million. The gross margin for the year reached 53%, with the total gross profit crossing the $1 billion mark.

Valuation Metrics

WISH stock is difficult to value as it is not currently profitable but only trades at 0.63 times sales and is expected to grow rapidly in the years to come. EBITDA is expected to improve by 5.9% in 2022, and the company is expected to become profitable in 2025 and continue growing its EBITDA rapidly in the following years.

Wall Street’s Take

According to Wall Street analysts, WISH earns a Moderate Buy consensus rating based on one Buy and one Hold rating assigned in the past three months. Additionally, the average WISH price target of $6 puts the upside potential at 187%.

Summary and Conclusions

WISH stock looks very attractively priced at the moment, as its growth is expected to be strong moving forward, Wall Street analysts are generally bullish on it, and the average price target implies massive upside potential over the next year.

On the other hand, the company is not yet profitable, and the stock price faces enormous headwinds right now. With inflation soaring, interest rates poised to rise, and geopolitical risks adding more stress on the investment thesis, WISH is definitely not a low-risk investment, nor is it for the faint of heart.

Overall, however, the stock looks cheap enough here to potentially make it a good time to add shares on the current pullback.

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