Shares of ContextLogic (NASDAQ:WISH) are trending on Yahoo! Finance after the company reported quarterly results that missed Wall Street forecasts. WISH stock is down 19% today in the wake of the release.
Beyond the latest disappointing earnings print, WISH stock is being weighed down by concerns about waning consumer demand and the legitimacy of the e-commerce company’s business. Those mounting concerns have pushed ContextLogic’s share price down 72% over the past 12 months. At 57 cents per share, WISH is now trading deep in penny stock territory.
What Happened to WISH Stock
San Francisco-based ContextLogic reported a fourth-quarter earnings per share (EPS) loss of 16 cents, which was in line with the expectations of analysts. However, the company’s revenue during the quarter amounted to $123 million compared to consensus estimates for $152 million. Revenue at its core online marketplace was $36 million, down 74% from a year ago.
Among the most concerning figures in ContextLogic’s earnings report was the company’s free cash flow. At the end of December 2022, it was a loss of $109 million compared to a loss of $50 million in the final quarter of 2021. This raises questions about ContextLogic’s ability to continue as a going concern.
Why It Matters
Looking ahead, ContextLogic issued troubling guidance, saying it expects a loss of $70 million to $80 million in the current first quarter. “As we enter fiscal year 2023, there remains much work to be done to put us back on the path to profitability and sustainable growth,” said CEO Joe Yan in a news release.
The Q4 earnings and guidance were ugly, but the ongoing losses and share price depreciation at ContextLogic have a number of people wondering out loud about the company’s future and its ability to continue operations. Earlier in February of this year, the company announced it was cutting 150 jobs, or about 17% of its workforce.
What’s Next for WISH Stock
WISH stock is taking a big hit today after it reported poor Q4 earnings that showed mounting losses at the e-commerce platform. The negative free cash flow puts the company on precarious footing, and the continued slide in its share price does not bode well for shareholders. As Wall Street continues to worry about ContextLogic, investors would be well advised to steer clear of this stock.
On the date of publication, Joel Baglole 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.
