Yahoo Finance Shareholders in ContextLogic (NASDAQ:WISH) have lost 82%, as stock drops 10% this past week
As every investor would know, you don't hit a homerun every time you swing. But it's not unreasonable to try to avoid truly shocking capital losses. So we hope that those who held ContextLogic Inc. (NASDAQ:WISH) during the last year don't lose the lesson, in addition to the 82% hit to the value of their shares. While some investors are willing to stomach this sort of loss, they are usually professionals who spread their bets thinly. We wouldn't rush to judgement on ContextLogic because we don't have a long term history to look at. Shareholders have had an even rougher run lately, with the share price down 50% in the last 90 days. We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.
Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.
Check out our latest analysis for ContextLogic
ContextLogic isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In just one year ContextLogic saw its revenue fall by 72%. If you think that's a particularly bad result, you're statistically on the money The market didn't mess around, sending shares down the garbage shute. (Or down 82% to be specific). Our mindset doesn't have a lot of time for stocks like this. A healthy aversion to bagholding (holding potentially worthless stocks) sees many shareholders avoid buying shares like this, rightly or wrongly.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
This free interactive report on ContextLogic's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
We doubt ContextLogic shareholders are happy with the loss of 82% over twelve months. That falls short of the market, which lost 18%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. The share price decline has continued throughout the most recent three months, down 50%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. It's always interesting to track share price performance over the longer term. But to understand ContextLogic better, we need to consider many other factors. For instance, we've identified 4 warning signs for ContextLogic that you should be aware of.
But note: ContextLogic may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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