This deal is worth $6.50 per share, according to the company. After the deal, ContextLogic will remain a publicly traded entity carrying $2.7 billion in net operating losses that a buyer may be able to use against its own net income.
WISH stock opened today at $6.42 per share with a market capitalization of around $150 million.
Break a Wish
ContextLogic began in 2010 as a software company, while Wish became a complete e-commerce site in 2013. At its height, Wish had billions in annual revenue, coming public in 2020. Over time, though, the platform has been criticized for allegedly selling counterfeit goods and allowing purchases of goods that were illegal in buyers’ home countries. WISH stock has lost more than 99% over its lifetime.
What happened to Wish? Well, the e-commerce industry moved on. Sites like PDD Holdings’ (NASDAQ:PDD) Temu now offer lower prices and serendipity through control of supply chains. This has eliminated margins for rival sites that bought finished goods through distribution.
ContextLogic tried to reboot itself as a fintech in 2021, under a former Block (NYSE:SQ) executive named Jacqueline Reses. I warned investors away, calling its plans hot air. Small investors on Reddit also tried to pump WISH stock as a meme stock, although the short squeeze eventually collapsed.
ContextLogic will now seek a purchaser for its tax losses, then return its capital to shareholders. The deal is due for completion in the second quarter. After that, ContextLogic will continue to trade publicly, but under a new ticker symbol.
What Happens Next?
Once again, a fool and his money were lucky to get together in the first place. Sharks will swallow ContextLogic’s losses and nothing will be left of its wishes — save food for the fishes.
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On the date of publication, Dana Blankenhorn did not hold (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.