Dear Reader,
ContextLogic Inc., the ecommerce shopping site trading under the name of Wish, recently staged an IPO on the Nasdaq stock exchange.
The company trades under the ticker WISH. Wish is trading at 13.81 bln. USD market capitalization currently. I believe Wish is fairly valued trading at 7 times Price/Sales based on 2019 revenue. Wish is loss making, but the negative profit margin is not that high at circa 10% for the last few calendar reporting years. Wish made 1.9 billion of revenue in 2020 and lost 136 mln. USD in the same year
Yes, Wish currently trades at a similar Price/Sales multiple to Amazon. Wish delivers products mainly of Chinese origin to Western customers that are price sensitive and of middle and lower income background. Basically, Wish gives a Western stamp of approval to Chinese merchandise delivery. Actually this is not a bad niche, since money is always hard to find for most people.
As long as central banks keep printing money and buying up governments' debts, Wish's stock price will continue rising and it definitely can outperform Amazon's stock price. What is more, if more and more investors get convinced Wish is a technology company its probable trading multiples could get rerated and Wish's stock price could rise multiple times.
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Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.
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Respectfully yours,
Petar Posledovich
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