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Why ContextLogic Plummeted 30% Today

By Rich Duprey - May 13, 2021 at 4:36PM

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Management at's parent insists the company is on the right track, though the market seems to disagree.

What happened

Shares of ContextLogic (WISH 1.81%) plunged 30% on Thursday, a day after the mobile discount e-commerce platform reported a larger-than-expected loss, although revenue beat Wall Street forecasts.

So what

The owner of the website went public late last year at a price of $24 per share, but since February has traded below that level. Today the stock fell off the table, closing at just above $8 per share.

Man holding head while looking at laptop computer

Image source: Getty Images.

Now what

While the COVID-19 pandemic allowed numerous discount retailers to come into their own, generating higher sales and profits, ContextLogic CEO Piotr Szulczewski and CFO Rajat Bahri told investors in a shareholder letter that the coronavirus outbreak caused "the value-conscious consumer demographic (to be) disproportionately affected by the pandemic. As the economy starts to recover, we believe macro trends will have a positive impact on our business."

Yet ContextLogic was also chasing after consumers by spending more marketing dollars on Facebook, television, streaming platforms, and on social media influencers. Management insisted, "We are confident we are making the right strategic decisions to grow our business for the long term."

The internet retailer reported revenue of $772 million compared to $440 million last year, ahead of analyst estimates of $743 million. But losses of $128 million, or $0.21 per share, were nearly double the $66 million loss it reported a year ago and worse than the $0.17 per-share consensus estimate.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.

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