Want to Know Why ContextLogic Inc. (WISH) Stock is Consistently Declining, Here’s Your Answer

ContextLogic Inc. (WISH), a mobile eCommerce company, has declined 2.75% in the premarket trading session. Consequently, WISH is trading at $4.96 at the time of the writing. On Wednesday, WISH stock closed the day at $5.10 after declining 7.10% during the mid-day session. The consistent decline came after the announcement of quarterly results by the company.

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WISH Q3 2021 Financial Highlights

On Wednesday, WISH released the financial results for the third quarter of the fiscal year 2021 which ended on 30th September 2021. On 30th September 2021, the company had cash and cash equivalents of $1.07 billion. The total revenue the company generated during the quarter was $368 million against $606 million for the same period of 2020. The total operating expenses for the quarter were $230 million against $443 million for the same quarter of 2020. The company suffered a net loss of $64 million ($0.10 per basic and diluted share) during the quarter against $99 million ($0.92 per basic and diluted share) for the same quarter of 2020.  

Financial Outlook

WISH also reported the financial outlook for the upcoming quarter alongside the financial results. The company expected that the fourth-quarter revenue would stand below that of the third quarter’s revenue. The prime reason for that decrease, according to the company, would be the ongoing reduction of ad spending during the quarter which caused the higher ad to be spent at the beginning of Q3 as compared to the beginning of Q4. Also, in specific terms, the Q4 revenue through the end of October is down about 20% when compared to the company’s average monthly revenue in Q3 adjusted for the same number of days.

Executive Commentary

Jacqueline Reses, Executive Chair at Wish, while commenting on the results said that the company made good progress in advancing itself in a positive direction toward long-term growth and profitability. She stressed that from a financial perspective, the company exceeded its bottom-line guidance range as a result of more efficient and reduced digital advertising spent during the period. The company is confident to return to growth during the second half of 2022.

What’s Ahead for WISH?

During the last three months, WISH has declined more than 45%, the prime reason for it being the negative sentiments around the stock. The law firms’ investigation against the company also affected the stock performance. Estimates however suggest that the upcoming quarters would provide the company with a much-needed breakthrough in its performance. Hence, potential investors should keep a close eye on the performance of WISH stock.