Ecommerce startup, Wish, is filing for an initial public offering (IPO). The platform is known for selling products from Asia at rock-bottom prices, although there are concerns about quality. The company's growth has accelerated during the pandemic.
Wish is expected to reach a valuation of $30 billion. Its parent company is ContextLogic and is based in San Francisco. Shares will be listed on the Nasdaq and trade under the symbol, WISH.
Company Profile
Wish was started by Piotr Szulczewski, a former Google (NASDAQ: GOOGL) engineer. One of its initial backers was Yelp (NYSE: YELP) CEO, Jeremy Stoppelman who invested $1.7 million in seed funding. The company's mission is to "Bring an affordable and entertaining mobile shopping experience to billions of consumers around the world."
Wish started as an app that allowed shoppers to create wish lists of their favorite products and then matched them to merchants. It grew through sharing and from advertising on social networks like Facebook (Nasdaq: FB).
Currently, Wish's platform uses browsing technology to personalize shopping visually for each customer, and it employs the same type of algorithms that are used on social media to deliver content to users that keeps them engaged and on the platform.
Wish also allows sellers to list their products on the platform and sell directly to consumers. It works with payment service providers to handle payments and does not stock the products themselves or manage returns. Wish's current iteration as an eCommerce company happened when it started hosting products directly on its application rather than directing users to merchants.
In 2019, Wish had revenue of $1.9 billion, which was a 10% year over year increase. It also lost $136 million in 2019. In 2018, revenue increased by 57%. Between 2015 and 2018, Wish's revenues increased at a 90% rate. In 2020, revenues increased by 32% to $1.75 billion. The company has no debt and $1.1 billion in cash. Wish's business saw acceleration during the pandemic.
One potential issue with the company is that there are many complaints about the quality of its products as the main feature is the bargain-basement prices. Many have compared it to the dollar-store version of Amazon (Nasdaq: AMZN).
Stock Price Outlook
The bull case for Wish is that its an eCommerce company which is a growing market. It also has a significant presence as it has customers in 100 countries, 100 million active monthly users, and 50,000 merchants. It's also the third most downloaded shopping app in the country.
The bear case is that Wish is not able to build customer loyalty especially as many products are reported of poor quality. Additionally, the company is IPO'ing at what may be a high-point for eCommerce in terms of second-derivative measures. Prior to the pandemic, there were signs of deceleration in Wish's business.