Online Retailer Wish Falls Into Worst Debut Of 2020 For Big U.S. IPO

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Online retailer Wish fell 16% in its business debut on Wednesday, in a plus muted start of life as a public company only for DoorDash and Airbnb last week.

Wish shares opened at $ 22.75 each, below the $ 24 they were sold for as part of its initial public offering of $ 1.1 billion. The shares closed at $ 20.05, giving the company a value of approximately $ 14 billion on a fully diluted basis, which includes options and restricted stock units as well as the outstanding shares listed in its filings. .

Wish, the 31st on a U.S. stock exchange to surpass $ 1 billion this year, marked the group’s worst debut, according to data compiled by Bloomberg. Its list follows last week’s successful business debut by By Dash and Airbnb. By Dash climbed 86% after its $ 3.14 billion offer, while Airbnb closed its first day up 113% after a $ 3.83 billion IPO that included so-called greenshoe stocks.

Market volatility should be expected in the early days and weeks of trading and will not distract the company’s long-term focus from serving bargain hunters on a site designed for discovering buyers, Peter Szulczewski, CEO of San Francisco-based parent company Wish ContextLogic, said in an interview with Bloomberg TV.

“We are very focused on the long term,” Szulczewski said. “If we just focus on that, the markets will reward us in the long run.”

Lesson for investors

DoorDash Shares and Airbnb fell this week, which may have been a factor in Wish’s lukewarm reception, said Kathleen Smith, director and manager of exchange-traded funds at Renaissance Capital. Smith said last week’s listing performance “teaches investors a lesson” about buying short.

Wish is also part of a competitive landscape. While ecommerce stocks have traded well this year, some investors compare Wish to Amazon.con Inc., which Smith says has a similar growth rate. “If I can own Amazon, why should I own Wish?” she added.

At its IPO price, Wish would trade around four times its projected sales for 2022, according to a person familiar with the matter. Amazon is trading at 3.6 times its sales estimates for 2021, according to data compiled by Bloomberg. EBay Inc. is trading at 3.37 times the same metric. A representative for Wish declined to comment.

Wish board member Hans Tung, managing partner of GGV Capital, said he is not worried about competing with Amazon. “I made my living as a venture capitalist who bet on being anti-Amazon,” he says.

Tung said he was also not concerned with the first day of trading. He noted that Peloton Interactive Inc., in which he was also an investor, fell in its early days last year and is now trading at more than four times its IPO price. GGV does not sell any part of Wish, he said. Tung compared Wish to Pinduoduo Inc., the Chinese e-commerce company that has grown 665% since it debuted in the United States in 2018. The strong stock market performance of the brick-and-mortar chains General dollar Corp. and Dollar tree Inc. shows the potential of the niche, he said.

December record

Online lender Upstart Holdings Inc. rose 47% in its debut Wednesday after valuing its IPO at the low end of a range marketed to raise $ 240 million. Upstart, based in San Mateo, Calif., Closed its first day with a market value of $ 2.14 billion. More than $ 22 billion has now been raised in IPOs on U.S. exchanges in December – a record for the month. The 2020 total is now over $ 174 billion, also a record high, the data shows.

Two other consumer-focused web companies, online video game company Roblox Corp. and installment loan provider Affirm Holdings Inc., are also pursuing IPOs. Roblox told employees it was delaying its IPO until next year.

Wish sets itself apart from other online retailers by focusing on value-conscious consumers, according to its documents.

Founded in 2010 by Szulczewski and Danny Zhang, who met at the University of Waterloo in Ontario, Canada, Wish connects sellers and potential buyers of everything from clothing to electronics and kitchenware. ContextLogic has other online marketplaces including Geek, Mama, Home, and Cute, according to the Wish website.

Sales, losses

Wish’s losses, as well as its sales, increased during the coronavirus pandemic, according to its filings. It recorded a net loss of $ 176 million on revenue of $ 1.7 billion in the first nine months of this year, compared with a net loss of $ 5 million on revenue of $ 1.3 billion over the same period in 2019.

The offer was led by Goldman Sachs Group Inc., JPMorgan Chase & Co. and Bank of America Corp. The shares trade on the Nasdaq Global Select Market under the symbol WISH.

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