ContextLogic Has Nothing to Do With Retail

One look at ContextLogic (NASDAQ:WISH) and I get the distinct impression that it’s anything but a retail e-commerce site. Its business is so hard to define; I have a tough time understanding why anyone would invest in WISH stock.

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If there’s one business that I can understand quickly, it’s retail. My dad spent years in the industry, my wife did, some of my friends did, and even I spent several years at Eaton’s, Canada’s version of Macy’s (NYSE:M).

If ContextLogic’s goal is to beat Amazon (NASDAQ:AMZN) at discount e-commerce apparel, its board of directors is a sure sign that’s not what it’s after.

Here’s why.

The Newest Hire

ContextLogic announced on Dec. 18, 2020, that it appointed Jacqueline Reses to its board of directors. 

“We are delighted to be welcoming Jacqueline Reses to our board of directors. Her knowledge of the financial services and technology sectors, as well as her extensive work with SMBs and understanding the complexities of international ecommerce will be extremely valuable to our business,” said CEO Peter Szulczewski.

“Jackie is joining us at a pivotal moment in our journey. I am confident she will be a positive addition to the board and believe she will help us achieve our long-term vision of unlocking ecommerce for all.”

Reses spent five years at Square (NYSE:SQ), a company that I love, and before that, she was at Yahoo; she served on the board of Alibaba (NYSE:BABA), is currently involved with a couple of high-powered special purpose acquisition companies (SPACs), including Bill Ackman’s Pershing Square Tontine Holdings (NYSE:PSTH), and spent many years in private equity at Apax Partners.

There is no doubt that this woman is smart and accomplished. 

However, you don’t put someone like this on your board unless you’ve got an agenda in mind. Either it plans to acquire a bunch of little fish in a consolidation play, or it wants to bulk up to make itself very attractive to Jeff Bezos.

Other Board Members

Let’s start with Chief Executive Officer Peter Szulczewski.

Szulczewski spent a few years at Google before leaving to found the company in July 2010. He’s a math geek. Nothing wrong with that. And he’s Canadian, like me, so I’ll go easy on him. Let’s just say he’s got gumption. 

Julie Bradley is the second of seven non-employee directors – Reses was the first – she is a finance wonk who’s got a significant amount of public company experience. Good to have.

Ari Emanuel is Mr. Hollywood. He’s the CEO of Endeavour Group Holdings, one of the world’s largest talent agencies. I guess he’d be good for recruiting top talent at ContextLogic. 

Joe Lonsdale is a venture capital guy. He co-founded and is a general partner at Eight Partners VC. He’s also an entrepreneur, having founded several companies. It’s always good to have someone like this on the board. 

Next up is another VC person. Tanzeen Syed is a managing director of General Atlantic and an all-around technology expert. Also useful, especially if your goal is to be a tech company disguised as an e-commerce apparel retail site.

Another Google alum, Stephanie Tilenius, brings a little of everything to the table, including most recently as CEO of a healthcare platform. I’m not sure what her focus will be while serving on this board, but she’s definitely got a killer resume.

Lastly, another venture capital director. Hans Tung is a managing partner at GGV Capital. His background includes technology banking and entrepreneurial stints and lots of experience investing in technology companies.

WISH Stock and This Board

I get it. The venture capital investors have to have board seats. That’s fine. But I have difficulty understanding why you have an eight-person board with absolutely no representation from the apparel or retail industries. 

Here’s how ContextLogic’s IPO describes its business:

“We launched Wish with a simple mission – to bring an affordable and entertaining mobile shopping experience to billions of consumers around the world,” page 119 of the IPO prospectus states. 

“Since our founding in 2010, our vision has been to unlock ecommerce for consumers and merchants, by providing consumers access to a vast selection of affordable products and by providing merchants access to hundreds of millions of consumers globally.” 

I love sweatshirts.

I once got my wife to go to the UCLA sports shop to get me a blue and gold sweatshirt while she was in Los Angeles on business. She was not happy with the time spent going out of her way to get that particular piece of clothing.

So, I’ve been playing around with the Wish website. Other than the low prices, I can’t figure out what’s so special about its user experience. 

Maybe I’m missing something but WISH stock doesn’t seem like the kind of experience worth paying seven times sales for. Especially when you can pay less than four times sales for Amazon, a business that generates $13.5 billion in operating profits just from its Amazon Web Services (AWS) division.   

Considering WISH stock, if ContextLogic had a couple of apparel and retail veterans on the board, I’d be a whole lot more comfortable betting on a business that lost $120 million in the first nine months of fiscal 2020 on $1.7 billion in sales. 

The Bottom Line

Back in August 2016, I said that Lululemon (NASDAQ:LULU) would be one of the top 50 performing stocks in the S&P 500 over the next decade. While I haven’t looked at the numbers in the four years since I’m pretty sure it’s right up there.

The company’s goals are easy to understand: Double sales of its men’s business, double online sales, and quadruple international sales.

Lululemon CEO Calvin McDonald has spent decades in retail. When you hear him speak, you get where he and the company are coming from.

When I look at ContextLogic and WISH stock, I just don’t get the same kind of feeling. And that has a lot to do with who sits on the board of directors.

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.


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