After raising $1.1bn in its IPO, Wish worries investors by dropping in value by 16% on its Nasdaq debut.
Investors hoped that a surge in online retail during the novel coronavirus pandemic, combined with the company’s focus on low-income and middle-income customers, would help the company’s share prices grow. Instead, investors have shown a lack of enthusiasm, demonstrating concerns with the company’s quality of products and reliance on Chinese supply chains.
Wish started its first day with a share price of $22.75, well below the $24 they were sold for during its $1.1 billion IPO which ended on 16 December. This gave the company a new valuation of approximately $14bn, 16% lower than its $16bn initial valuation.
Losses are a concern
Investors may also be concerned with the company’s inability to turn a profit, despite the advantages given to e-commerce during 2020. During the first nine months of the year, Wish reported a net loss of $176m, up from a net loss of $5m reported during the same period of 2019.
The company’s sales dropped below 2019 levels during the summer of 2020 In contrast rival e-commerce platform, Amazon, experienced 40% year-on-year increase in net sales during Q2 2020.
Wish is supposed to be one of the worlds fasted growing e-commerce platforms
The San Francisco based e-commerce platform boasts over 100 million monthly active users (MAUs) and claims to sell approximately 1.8 million products a day with 150 million products up for sale.
The company believes its personalized feed of products distinguishes its self from rival e-commerce platforms.
Wish Chief Executive and ex Google software engineer, Peter Szulczewski, continues to reassure investors that the company will provide long term growth and that short term volatility should be ignored.
Investors should be worried about the significant drop in value, especially when other blockbuster IPO’s have experienced significant growth on their trading debuts. Of the 31 companies that raised over $1bn from their IPO in 2020, Wish experienced the worst drop in share price during its first day of trading.
Airbnb share prices more the doubled during its first day of trading, with share prices starting at $146, up from an original IPO share price of $68. DoorDash shares also grew 86% on its trading debut closed at $189.51 December 9th.