ContextLogic (WISH 0.76%), better known as Wish, was once a fast-growing e-commerce platform, but since going public at $24 per share in Dec. 2020, it has become one of the worst-performing tech stocks on the market. Shares are down nearly 95% from the IPO -- as a Wish investor, I have been appalled by its poor performance.

Still, I am hopeful Wish can turn around its business. To this end, I searched for hints of a turnaround when going through its first-quarter earnings results. Here are three takeaways I found.

Person shops online.

Image source: Getty Images.

1. Wish's performance went from bad to worse

The last 12 months were probably Wish's worst year since its inception. At first, user growth slowed, and then it turned negative. The decline in users flowed through its financials, resulting in leadership leaving the company. In the past year alone, the founder/CEO, CFO, and chairman of the board all stepped down.

When most tech companies were reporting solid results last summer, Wish reported an unexpected 6% decline in revenue in the second quarter. The management team promised better performance, but things just continued to get worse from there. In the latest quarter, revenue fell 76% year over year to $189 million, and its net loss came in at $60 million.

Wish's poor performance was partly due to management's decision to halt advertising to focus on improving its user experience. The idea is to fix the leaks and then turn on the marketing engine to recapture growth. Still, it will take a while for a turnaround (if any) to happen.

Meanwhile, investors will likely see even worse numbers in the next quarter as the new management team works through the company's problems.

2. Wish is striving to improve the customer experience

Many factors led to Wish's current situation, but topping the list is its poor customer experience.

As a cross-border e-commerce company, Wish helps overseas merchants (mainly from China) sell their products to customers in Europe and the United States. While buyers get good bargains, they have to compromise on other factors like product quality and convenience -- it takes at least two to three weeks for products to reach buyers. But in the competitive e-commerce industry, customers want low prices, high quality, and fast delivery.

With new CEO Vijay Talwar at the helm, Wish aims to fundamentally improve its shopping experience. To this end, the tech company redesigned its app and added new features (such as shoppable videos) to improve customer engagement. It is also working on its logistic service to ensure faster and on-time delivery.

All of these efforts contributed to an improved net promoter score (NPS). Talwar noted in the company's prepared remarks on May 5:

I'm proud to report that our investments across our shopping experience, customer service, pricing, shipping and delivery, have driven significant improvements in our Net Promoter Score (or NPS). NPS is considered a critical metric in determining a company's current success with consumers. We experienced positive improvements in NPS from December to January, and further improvement from January to February and from February to March. In total, we've seen a doubling in our NPS score in a matter of a few months.

On top of that, Wish is investing in high-quality merchants to enhance the user experience further. Under its new standards, merchants must meet various criteria to enjoy preferential treatment from Wish, including lower commission rates. Noncompliance, on the other hand, will lead to penalties, which can include a complete removal from the platform. The aim is simple: to have the best merchants on Wish to serve end users.

3. A silver lining for Wish

Wish is facing a challenging time, and the management team is working hard to save the sinking ship. Unfortunately, a turnaround will not happen overnight (or may never occur altogether). Still, there are a few reasons to be hopeful.

First, Wish's focus on improving customer service is the right move, and there are already early wins from its efforts -- the improvement in NPS as one example. In other words, users approve of the changes, indicating the company is moving in the right direction.

Second, Wish still has plenty of cash on its balance sheet (around $1 billion) to see it through a turnaround. As long as management is prudent with spending, that cash hoard buys management time to reorganize.

Last but not least, Wish had an installed base of more than 500 million users. Though many of these users are no longer active, Wish is working to recapture them by offering a differentiated (and significantly better) shopping experience. Success here should improve the company's performance. Wish reported 27 million monthly active users in the first quarter, so reclaiming even 10% of its lapsed users could almost triple its active base.

What it means for investors

Wish faces major hurdles to evolving its business. While it will not be an easy task, I believe the management team has a decent shot at turning the ship around with their focus and spending going to the right places.

But investors will need a lot of patience as they wait for this turnaround story to play out. What's more, they will need to have a strong stomach to withstand the ongoing volatility the stock will likely experience in the coming quarters.