Don’t Wish Upon ContextLogic’s Star

Closeup of mobile phone screen with logo lettering of wish (owned by ContextLogic) shopping app, blurred website background (focus on center of logo)

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Perhaps the worst thing that can happen to ContextLogic (NASDAQ:WISH) is to print some positive data on the price charts. That way, it can draw in more speculators who might not have the time or the inclination to consider the long-troubled fundamentals. While WISH stock has recently outperformed its usual tendency to lather in crimson ink, the journey has been an incredibly choppy one.

Yes, on the optimistic front, WISH stock has gained 15% in the trailing month leading up to the open of the Apr. 7 session. Some of the enthusiasm can be tied to the China Securities Regulatory Commission, which would pave the way for publicly traded Chinese companies listed in the U.S. to share sensitive data with domestic regulators. Under a prior protocol, only Chinese regulators could access such information.

Although the news doesn’t directly affect WISH stock, as our own Louis Navellier pointed out, ContextLogic is highly dependent on Chinese knockoff products. Therefore, whatever actions can help bolster the robustness and stability of China’s economy would be a downwind benefit for companies relying on the country’s massive product manufacturing ecosystem.

Nevertheless, on a year-to-date basis, WISH stock has dropped about 30%. This implies that near-term benefits are not enough to address the core issues plaguing ContextLogic. InvestorPlace contributor Stavros Georgiadis pulled no punches, suggesting that investors avoid WISH until it fixes its financials. Georgiadis wrote, “Contextlogic has been unprofitable in all four quarters in FY 2021. What is even worse for WISH stock is that the company has not been profitable at all for the full period of 2017-2021.” If that wasn’t bad enough, key metrics such as active users, buyers and gross margin have slipped disappointingly on a year-over-year basis.

While the recent upswing is interesting from a purely speculative perspective, ContextLogic has not materially proven worthy of a serious investment. Until it does, most folks will probably be best served watching WISH stock from afar.

On the date of publication, Josh Enomoto 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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.


Article printed from InvestorPlace Media, https://investorplace.com/2022/04/avoid-wish-stock-charting-noise-focus-on-fundamentals/.

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