Life as a public company has been brutal for ecommerce operator LightInTheBox (LITB). In early June, the company pulled off its IPO at $9.50, but as of today, the stock price has dropped to $7.70. The company just can’t seem to deliver on Wall Street’s expectations.
LITB has an interesting platform, with a focus on apparel, small accessories/gadgets, and home and garden, all of which are easily customizable through web tools. The service is popular with wedding dresses, of which there 4,300 distinctive designs. To keep its business cost-effective, LITB has established a sophisticated supply chain in China.
The company’s primary market focus is North America and Europe. To reach these customers, LITB uses innovative marketing on social platforms like Google (GOOG) and Facebook (FB). And the company has been pushing aggressively with its mobile offerings, recently launching a revamped mobile app.
All this sounds great, but the problem is that LITB lacks consistency. In the third quarter, LITB revenues increased by 33% to $68.1 million, and the company posted an adjusted loss of 4 cents per share. But the Street was looking for revenues of $69.87 and a profit of 5 cents per share.
The company’s guidance was even more ominous. For the all-important Q4, the company is forecasting revenues of $75 million to $77 million, which comes below the consensus estimate of $83.1 million. Investors really don’t want to see those kinds of numbers, especially for a company that is supposed to be a high-growth operator.
LITB’s underperformance is nothing new for investors. The company had a big miss in Q2, which resulted in a 40% plunge in the stock.
Given that history, it’s probably a good idea to avoid LITB for now. As seen in the past with other upstart ecommerce IPOs — such as Groupon (GRPN) back in 2012 — it can be dangerous to chase a company that has a habit of falling short on its growth path.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.