Wish (ContextLogic) remains one of the most underappreciated assets within e-commerce trading at just 1.3x forward EV to Sales.
Wish's latest partnership with PrestaShop will further accelerate international expansion and growth initiatives.
While accurate data regarding its short interest is difficult to find as most of its float is still locked up, I estimate a short interest between 30-40%.
I believe bear arguments including high marketing spend and stalling user numbers are already baked in the current share price.
Wish's strategy to engage and retain users by utilizing an AI matching system that optimizes platform growth, user experience, and merchant return on investment. The strategy to create an interactive mobile shopping experience appears to be working well: Impressively, Wish gets over 500,000 reviews per day from users, surpassing even Amazon and other shopping sites in this regard, demonstrating just about how engaging the platform is. Around 80% of first-time shoppers return to buy again.
Wish is, therefore, able to establish itself in the highly competitive E-commerce market that offers a tremendous runway for growth. Currently, around 40% of the E-commerce market share is owned just by Amazon. Compared to Amazon, its TAM may be limited as it concentrates on its lower-income niche, which is how it became popular in the first place. Still, this represents a +$3 trillion market opportunity for Wish to tap into. It is also worth noting that according to reports, Amazon tried to acquire Wish for $10 billion, yet Wish rejected, believing growing the business to $100 billion in annual sales, at which point it would be valued significantly higher.
Even after the latest +50% rise, shares are still trailing far behind peers such as Poshmark (NASDAQ:POSH), eBay, Amazon, and (Shopify (NYSE:SHOP)). At over $3 billion estimated revenues, Wish is trading at just 1.8x Price to Sales, just half of eBay's current valuation and much lower than Poshmark. Current estimates are calling for over $6 billion in revenues by 2025 and $1 billion in free cash flow, meaning that Wish trades at just 7x free cash flow estimates, or 1 times sales. In early 2021, its P/S ratio stood closer to 5x, so there is potential for a valuation expansion.
Wish remains one of the most underappreciated assets within e-commerce, boasting over 100 million monthly users on its platform and connecting thousands of merchants from all over the world. The mobile shopping app continues to be one of the top downloaded shopping apps in the space and has a unique value proposition, which is smarter than it appears at first sight. Moreover, its latest partnership with PrestaShop will give over 300,000 merchants free access to a direct integration that connects them directly to Wish's merchant dashboard, further driving growth. While there are risks to Wish's imperfect business model, such as lagging profitability, patient investors could be rewarded mightily.
精彩评论