From my recollection, the last time I discussed ContextLogic (NASDAQ:WISH) stock was in November of last year.
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The online e-commerce platform that facilitates transactions between sellers and buyers, was popular play among the social media crowd. It is fair to say that WISH stock has had its positive moments. Unfortunately, they’ve been few and far between, leading to my admittedly ungenerous but genuine perspective.
At the time, I mentioned that ContextLogic — like any other company that depends on products shipped from China and other international locations — suffered significantly from the global supply chain crunch.
What’s more, consumers started to get smart about the situation and adapted accordingly.
In that story, I cited a Wall Street Journal report mentioning that the supply chain crisis even affected something mundane as Halloween costumes and related products. Therefore, astute buyers made their October holiday acquisitions back in July and August of all months.
Here’s an interesting tidbit. When CGTN America interviewed me regarding my thoughts on the Halloween economy, I mentioned this specific WSJ article.
As it relates to WISH stock, consumers have learned that you can’t celebrate a purchase until the underlying product is in your hands. Therefore, the delays that affected ContextLogic’s merchant partners probably had a more pronounced effect on the company.
Plus, I don’t think too many folks want to deal with purchases from an e-commerce firm sourcing their products from international locations when they can enjoy superior and stable customer service relationships with established retailers.
Still, it honestly doesn’t matter what I have to say. Obviously, the market is the ultimate arbiter. If it believes that WISH stock is the next Amazon (NASDAQ:AMZN), then that’s the guidance you should follow. Except that even the market has given up on the name.
WISH Stock Requires Wishful Thinking
From the date I last covered ContextLogic to the time of writing, WISH stock has plummeted around 50%. I’m not here to take “credit,” I’m just pointing out that this is an awful loss.
Over the trailing year, WISH stock is more than 85%. Even on a year-to-date basis (and it’s only been a little more than a week days), shares have shed nearly 15% of value. If there’s any a time when the phrase, don’t fight the tape mattered, it’s now.
Please. Don’t fight the tape.
Now, we can get into the minutia of all that ails WISH stock. From the executive shakeup to the cash burn, my InvestorPlace colleagues have covered it all. I’m not going to bring anything new to the table because frankly, there’s really nothing much to talk about.
If you thought ContextLogic was a terrible investment a few months ago, it is worse today. If you thought it was a discounted opportunity back then, you can buy shares even cheaper right now. From my point of view, nothing has stood out to change the core dynamic of WISH stock.
Except maybe if you’re an extreme speculator, you could view shares as a takeover opportunity. Throughout January 2021, plenty of folks thought WISH was a $30 stock. Perhaps with the right leadership and resources, it could get there.
The problem with this concept, though, is that the company is in freefall. Again, when it hasn’t even been a week into the new year and you’re already down big YTD, your suitors will probably wait things out to see if another discount is incoming.
Could ContextLogic Be a Penny Stock?
I don’t want to get into negative price targets because it almost always leads to my inbox being inundated with annoying messages so I won’t give specific numbers. However, I’ll say this much: I wouldn’t be surprised if WISH tumbled into literal penny stock territory.
Now, I don’t think it will be literally priced as a penny. But something below $1? I can definitely wrap my head around that. The supply chain crisis has been awful to WISH stock. As well, with the Federal Reserve signaling an aggressively hawkish monetary policy, investors are incentivized to rotate out of risk-on assets into something stable and reliable.
About the only thing that’s reliable for WISH stock is that it has proven reliably bearish. So, if you’re going to take the takeover thesis, be prepared to absorb some painful flashing numbers. Everyone else should stay away to spare their sanity and their wallet.
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.
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