As Ron Burgundy so eloquently said, “That escalated quickly.” The year may have gotten off to a promising start for Wayfair (NYSE:W) stock, but the entire world has changed since then.
The spread of the novel coronavirus, and Covid-19, the disease associated with it, has put virtually every economy on hold. While stocks writ large continue to feel the pressure in 2020, it’s also no surprise that Wayfair is feeling it more than others. And given the current state of its financials that makes sense.
In short, until the company starts making money it’s going to be a bumpy ride. With that said the company’s fourth-quarter results were still very encouraging:
- Revenue of $2.5 billion up 25.8% from a year ago.
- Gross margin of 22.8% down 130 basis points from a year ago.
- Active customers of 20.3 million up 34% from a year ago.
- Orders delivered of 11.2 million up 27.1% from a year ago.
- Percentage of orders from repeat customers of 68.6% up from 66.4% a year ago.
The Bottom Line on W Stock
These metrics are telling the story of a company that continues to gain market share in a large and growing market opportunity. The wildcard in all of this right now is how Wayfair’s business will be impacted by not only lingering China trade issues but also the coronavirus.
I expect to receive more clarity regarding both matters when the company reports earnings next. For now, the safe assumption is that things will likely get worse before they get better.
But Wayfair remains a good business with plenty of potential so investors are better served staying focused on the forest, not the trees. I’m not ruling out W stock as one of the best stocks for 2020 yet.
As of this writing, Jason Moser, a senior analyst with The Motley Fool, held shares of W stock.