Why Wayfair Stock Rocketed Higher Today

Investors were impressed by the retailer's sales growth.

Timothy Green
Timothy Green
Feb 22, 2019 at 1:01PM
Consumer Goods

What happened

Shares of online retailer Wayfair (NYSE:W) surged on Friday after the company reported strong fourth-quarter results. Wayfair beat analyst estimates for both revenue and earnings, sending the stock up about 32.5% by noon EST.

So what

Wayfair reported fourth-quarter revenue of $2.0 billion, up 40% year over year and $40 million above the average analyst estimate. Active customers in the direct retail business rose 37.9% to 15.2 million, while orders delivered jumped 42% to 8.8 million.

Rising orange and blue stock chart.

Image source: Getty Images.

Non-GAAP earnings per share came in at a loss of $1.12, compared to a per-share loss of $0.58 in the prior-year period and $0.16 better than analysts were expecting. Free cash flow was a loss of $23.2 million, while adjusted EBITDA was a loss of $53.8 million.

"We remain focused on our long-term approach to investing in the business, and believe the Company's outsized growth at scale is a testament to the strength of our brand and platform as we redefine the shopping experience in our category," said CEO Niraj Shah.

Check out the latest Wayfair earnings call transcript.

Now what

Wayfair continues to grow revenue at a breakneck pace as furniture sales shift online. The bottom line is moving in the opposite direction, though. Both non-GAAP net loss and adjusted EBITDA loss nearly doubled compared to the fourth quarter of 2017. Wayfair's impressive growth doesn't come cheap.

The market only cared about the top line on Friday, pushing the stock up to a new 52-week high. Profits will eventually matter to investors, but they don't right now.