ContextLogic (NASDAQ:WISH), which runs a fading e-commerce site called Wish, sent its stock price up by announcing a $50 million share repurchase plan. This comes just a week after the company announced a 1:30 reverse stock split.
Shares jumped 20% overnight and were trading early on April 21 at $8.70 each, representing a market capitalization of $200 million. On a pre-split basis, they’re worth less than 29 cents. The share repurchase plan is set to expire in December.
Wish is a mobile commerce site that grew through the heart of the Covid-19 pandemic. It had revenue of more than $2.5 billion in 2020 and $2 billion in 2021. But it was never profitable, losing $745 million in 2020 and another $361 million in 2021. For 2022, sales fell to $577 million but losses grew to $399 million.
Wish first pitched itself as an online version of Five Below (NASDAQ:FIVE). Then it hired Jacqueline Reses from Block (NASDAQ:SQ), formerly Square, in 2021. She tried to turn the company into a fintech, hiring an executive from Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and winning a payment services license in the Netherlands.
The man behind the curtain is Peter Thiel, whose venture fund gave birth to Wish and who was close to Reses. Her goal was to become like Affirm (NASDAQ:AFRM), a “buy now, pay later” company that was hot then. Since then, Affirm also hit hard times, the stock falling from a high of $164 to its current price of about $11.
Writing right after the reverse split, InvestorPlace’s Samuel O’Brient called the shares “highly unstable” and warned readers away. “At this point, shares belong on a list of penny stocks to sell,” he wrote.
What Happens Next for WISH Stock?
The Context Logic business model is a two-time loser. Those failures can’t be wished away.
Analysts who panned the reverse split based on the company results are telling you the truth. If you are stuck in the stock sell on this strength.
On the date of publication, Dana Blankenhorn held a long position in GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
