What happened

Wayfair (W -1.94%) shareholders trounced the market this week as the stock gained 18% through Thursday trading compared to a 3.3% increase in the S&P 500, according to data provided by S&P Global Market Intelligence. The rally didn't put the stock much closer to positive returns over a wider time frame, though. Shares remain lower by more than 70% so far in 2022 compared to the market's 20% decline.

The rally was powered by bargain hunting from investors who have been attracted by Wayfair's reduced valuation.

So what

Wayfair's business is going through some challenges right now. Sales fell 14% in the most recent quarter and hardly improved at all in fiscal 2021. Net losses are back, too, following an encouraging period of substantial earnings through earlier phases of the pandemic.

But Wayfair remains one of the largest online shopping platforms for home furnishings. It still counts over 25 million active customers and, while that figure has declined from its pandemic peak, it still translates into significant market share in an attractive industry. Shoppers are happy with the service, too. Repeat customers accounted for 78% of orders in Q1, up from 75% a year earlier.

Those positive metrics underpinned the stock's rebound in a week that saw the tech-heavy Nasdaq index soar by 4%. Given Wayfair's nearly 80% slump heading into the week, it's no surprise that the stock would be among the biggest beneficiaries of improving sentiment on Wall Street.

Now what

CEO Niraj Shah and his team still believe that Wayfair can grow to an over $100 billion annual sales rate by 2030 compared to just $14 billion in 2021. The home furnishings industry has a bright future, even though sales are currently being pressured by consumers' decision to prioritize other spending categories in this phase of the pandemic.

Investors who believe that bullish outlook might consider buying the stock today. While it's likely that this week's rally will give way to other short-term declines, returns should be positive over longer time frames if Wayfair continues growing toward that ambitious $100 billion sales mark.