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Wayfair's Stock Surges as Coronavirus Relief Package Nears Approval

By John Rosevear - Mar 25, 2020 at 2:58PM

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Wayfair's investors are betting on a quick economic recovery.

What happened

Shares of Wayfair (W -4.04%) were soaring on Wednesday afternoon amid a broad-based market rally as U.S. lawmakers appeared close to approving a $2 trillion economic-rescue package. 

As of 2:30 p.m. EDT, Wayfair's shares were up about 27.4% from Tuesday's closing price.

So what

Unlike most of its home-goods competitors, which rely on brick-and-mortar stores for much of their revenue, most of Wayfair's business happens online. (The company does have two stores, one of which is an outlet.) As the coronavirus pandemic has all but shut down retail foot traffic in the U.S. and Canada, Wayfair's business model has come to look like a near-term advantage.

A living room staged with Wayfair's furniture and home goods.

Image source: Wayfair.

But like all retailers, Wayfair's longer-term prospects will depend on how the U.S. and other parts of the world recover as the pandemic passes. Will the U.S. economy bounce back quickly, say by the end of 2020? Or will it be mired in a deep, prolonged recession?

One of the goals of the $2 trillion economic-rescue package that was nearing approval on Wednesday afternoon is to improve the odds of a quick recovery. That's why investors were snapping up Wayfair's shares on Wednesday. 

Now what

Including today's trading, Wayfair's stock has posted strong gains for four straight sessions, but it's still well below the levels it was trading at in early February. The stock suffered after the company announced layoffs following the holiday shopping season, and again after Wayfair reported slowing growth earlier this month.

What happens now? It's still too early to tell how this pandemic is likely to affect the economy over the next couple of months. But things look a bit better for Wayfair now than they did a week or two ago.

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