Wish stock tanks 18% as e-commerce company says demand slowed, costs rose more than expected

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Shares of ContextLogic Inc. fell much than 18% successful after-hours trading Wednesday aft the genitor of e-commerce tract Wish said request for its products slowed, less users and progressive buyers utilized its platform, and costs roseate much than it had expected.

ContextLogic Inc. WISH, -4.27% reported a second-quarter nonaccomplishment of $111 million, oregon 18 cents a share, compared with a nonaccomplishment of $11 million, oregon 10 cents a share, successful the year-ago period, erstwhile the institution was private. Sales fell 6% to $656 cardinal from $701 cardinal a twelvemonth ago.

Analysts connected mean expected the institution to study losses of 13 cents a stock connected income of $723 million, according to FactSet.

Logistics improved and “we expected idiosyncratic retention to amended present that we person much reliable logistics, but alternatively retention declined,” the institution said successful a missive to investors.

“While we are not satisfied with these results, the 2nd 4th of 2021 was already going to beryllium a challenging year-over-year comparison,” since the institution benefited from a important summation successful mobile usage and little contention from brick-and-mortar stores, Wish said.

ContextLogic went nationalist precocious past year, arsenic the pandemic was pushing consumers to online purchases. ContextLogic priced shares astatine $24 successful its December archetypal nationalist offering, but the banal has been slammed since, falling arsenic debased arsenic $7.52 successful nationalist trading this year. The banal closed Wednesday astatine $9.41.

Wish said the fig of app installs fell 13% and mean clip spent connected its level fell 15% quarter-on-quarter. At the aforesaid clip idiosyncratic engagement was dwindling, the outgo of integer advertising, which Wish uses to thrust request and transactions to its app, accrued much than it expected.

“In addition, the caller privateness changes for (Apple Inc.’s AAPL, +2.08% ) iOS person caused much advertisers to displacement walk to Android devices, creating much contention for a
limited proviso of impressions,” the institution said. “Ultimately, this drove up contention for advertizing bids, restrained our quality to scope much users and accrued advertizing costs for Wish since astir of our maturation selling has been focused connected Android, the preferred instrumentality for the bulk of our users.”

Wish said that arsenic a effect of the headwinds it volition displacement absorption connected products and merchants that gain affirmative ratings and adhd much recognizable marque names, successful summation to focusing connected categories specified arsenic apparel, location goods, and gadgets “that construe good into an ‘online treasure hunt’ experience,” it said.

The actions, however, volition instrumentality clip to instrumentality clasp and are not expected to “contribute meaningfully to affirmative year-over-year results earlier the 2nd fractional of 2022,” Wish said.

Wish said it has chopped backmost connected integer advertising. It did not supply its accustomed quarterly gross outlook, saying it volition absorption “squarely connected execution and businesslike disbursal management.”

By mode of context, however, the institution said quarter-to-date full gross done July 2021 was down astir 40% compared with the 2nd quarter, portion gross from its marketplace was down astir 55%.

“With the propulsion backmost successful integer advertisement spending, we expect 3rd 4th gross to diminution further,” the institution said. Wish said it expects a third-quarter adjusted Ebitda nonaccomplishment betwixt $70 cardinal to $65 million.

Analysts connected mean were expecting adjusted-Ebitda losses of $74 million, according to FactSet.

Claudia Assis successful San Francisco contributed to this report

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