Risk/Reward Rating: Negative
Wish (ContextLogic), an ecommerce platform, was down 26% pre-market after reporting disappointing Q2 2021 financial results. Sales declined 6.5% versus Q2 2020 while the company’s original guidance for the quarter was for 3% growth. This is a large miss on the top line and should dent investor confidence.
More concerning is the outlook for the current quarter as management is now unable to provide a forecast. Executives did mention that through July, the first month of the third quarter, sales are tracking to be down 40% versus the disappointing Q2 numbers. If this trend continues for Q3 2021, sales will collapse 33% versus Q3 2020.
Most concerning of all is the company’s cash burn rate.
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