In a market made up of all types of stocks for all kinds of investors, ContextLogic (NASDAQ:WISH) has been anything but worthwhile merchandise. However, WISH stock traded short has been a worthy play for bears.
Today though, can some of 2021’s most damaged goods in the market offer a buying opportunity for WISH investors? Let’s take a look off and on the WISH stock price chart, then offer a risk-adjusted determination aligned with those findings.
WISH Stock Had a Rough 2021
To say this past year was a tough one for WISH shareholders is an understatement. The aspiring e-commerce and logistics play saw its stock tumble 83% to finish at $3.11 and just pennies removed from its all-time-lows.
Even worse, in early 2021 WISH stock was up as much as 80%. Yes, you read that correctly. And from that all-time-high of $32.85, shares have lost 92%! Even in a year with ample stock casualties at odds with the broader averages, boisterous gains and record setting prices, that’s about as bad as it gets.
But before you go feeling sorry for WISH stock investors, don’t. If, during this past year’s theatrical meme trading, there was ever a bearish stock for which the writing was on the wall, Wish was a definite frontrunner.
Last January, Wish shares rallied with the best of them. By “best of them,” I’m referring, of course, to meme stocks like GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC). WISH stock moved with these and others indebted to the fast-money scheming of retail traders on Reddit.
Entering a new trading year where hope can spring eternal, don’t think for a second that Wall Street has, as it does on occasion, overreacted. The fact is WISH stock’s painful decline still values shares at $2.3 billion. That’s almost a mid-cap valuation and far from a laughing matter.
How Wish Stacks Up
It’s only fair to say last January’s $19.31 billion price tag, built by the digits of overzealous buyers, was simply that much more silly. That is, unless you believe WISH stock deserved a similar valuation to e-commerce giant Amazon (NASDAQ:AMZN) back in 2007.
Sure, AMZN stock wasn’t nearly the diversified tech giant it is today back when it fetched $19 billion fifteen years ago. Not unlike WISH stock, Amazon also sported tons of red ink and negative free cash flow back in the day.
The buck, however, and any feel-good comparisons stop right there. Wish is no AMZN stock, let alone even a company we can safely assume is sustainable. And to be a buyer of WISH stock, investors need to be incredibly upbeat that Wish can get past today’s sometimes forgivable fundamental eyesores.
But that type of clemency is typically best reserved for companies on the cutting edge of a new market — like Amazon, even back in 2007. But WISH stock hardly meets those qualifications.
Wish’s more dubious business model is based on selling mostly cheaper (but not exactly inexpensive) knickknacks and knock-offs destined to collect dust in a drawer. This and its recent key departures, including its CEO, mean WISH stock doesn’t add up as authentic merchandise to buy.
WISH Stock Weekly Price Chart
Source: Charts by TradingView
Despite losing more than 90% from its highs, short interest still comes in at a hefty 24% of WISH stock’s shares. But if investors expect to use that feature to their benefit, the chance of profiting from a short squeeze has shrunk considerably.
Much ado, of course, has been made of Reddit and its infamous cornering of bears over the past year. But that game has largely played itself out — and mostly to the advantage of the shorts.
In the end, bearish investors still see the value in betting against Wish. And mind you, they’re not in the business of saving the manatees. They’re out to make money.
So go ahead if you must. Buy WISH stock. But don’t say you haven’t been warned both off and on a price chart, which speaks well enough on its own.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.