Wish[ing] on an IPO

By Jonathan Paglialunga

Wish, a popular e-commerce marketplace, filed its Initial Public Offering (IPO) prospectus on Friday November 10th, alongside various other major companies including Airbnb, DoorDash, and Roblox, marking a significant week for the stock market and surrounding industries.

ContextLogic, Wish’s parent company, plans to list its shares on the Nasdaq stock market index and utilize the title WISH. This filing allows the public the opportunity to view the company’s financial records for the first time since August, when Wish confidentially filed to go public. Wish was founded in 2010 and features a vast selection of discounted goods, ranging from cheap home decor and apparel to electronics and toys.

Unlike other major e-commerce marketplaces such as Amazon or Ebay, Wish advertises itself as a website that can be used by shoppers of every economic status since it does not charge a fee like Amazon’s Prime membership, which otherwise costs $119 per year. According to the company’s IPO filing, “We built Wish to serve these consumers who favor affordability over brand and convenience, and are being underserved by traditional ecommerce platform”

Wish reported $1.75 billion in revenue for a period of 9 months ending September 30, 2020 in comparison to the $1.33 billion yielded during the same period last year, an increase of 32%. This growth rate is slightly over 3 times the rate from 2018 to 2019 and shows promise for the startup’s potential.

Although Wish is displaying that it can be a successful platform in the competitive e-commerce space, it has struggled to display the same level of potential as giants such as Amazon, Target and Walmart. For example, in the third quarter, Amazon reported first-party and third-party sales growth rates at 38% and 55% respectively. With help from the increase of online shopping due to Covid-19, Target and Walmart have successfully capitalized on this and reported  increased sales by 155% and 79% respectively in only one year.

Unfortunately, Wish’s growth rates and revenue levels cannot match those massive corporations, but the company does have a relatively stable bottom line. According to their financial reports, Wish lost $247 million in 2017, $208 million in 2018, $136 million in 2019 and $176 million in the first nine months of 2020. Although it may not be impressive as a statistic, consistency is one of Wish’s best attributes and hopefully, it will help them grow in the near future.

In terms of highlighting Wish’s success, the company has reported 100 million monthly active users in over 100 countries, a 30% increase from its previously reported number of 70 million. In the IPO filing, it stated that more than 500,000 merchants are signed up to sell on the platform which has grown its catalog size to 150 million products.

Is this the right time for Wish to file its IPO? The Covid-19 pandemic has helped various large companies increase their sales and subsequent growth, but its properties have also directly damaged logistical aspects of how companies run their businesses. As a benefit, Wish has taken advantage of decreased competition due to the closure of brick and mortar stores during lockdown and have increased their mobile users. As a disadvantage, Wish is in the same situation as other retailers who have experienced longer delivery times, supply chain disruptions and the loss of some merchants during the peak of the pandemic.

Wish is looking to utilize the post-election opportunities for U.S. stocks and investor demand for high-growth tech companies and aims to launch themselves into the stock market during the period between U.S thanksgiving and Christmas.

Photo by Rupixen, Unsplash

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