$WISH Upon A Falling Economy
--
I’m of two minds on $WISH, one of the most recent IPOs to grace the markets.
While the purveyor of low priced imported goods has managed to increase its net losses from $136M (2019) to $176M (2020) and its business is heavily reliant on a Chinese import market that faces non-zero regulatory risk, it has two things going for it that make it at least slightly more attractive than rival IPOs.
The first is that it tanked on its opening day, closing at $22.05, well below its $24 opening price. I like this because it implies (at least partially) that the shares are being priced more by underlying fundamentals than pure sentiment. While those fundamentals are somewhat shaky, you could say the same thing about many other growth companies that popped 100%+ their opening day.
The second is the bifurcated Recession we find ourselves in. While it’s highly likely that 2021 will be better than 2020, there are going to be a LOT of consumers in the market who will be focused on value. Even as they treat themselves to a few more toys, cost will remain top of mind. Just as Dollar Stores ted to do better during economic pullbacks, I think Wish could perhaps offer a certain amount of downside protection against the endless re-opening optimism.
While I’m not so optimistic about these shares that I’m willing to take a particularly large position, I am more excited than I would be to buy $ABNB at a $100B market cap.
Prescriptions
I picked up some shares in $WISH today, it’s still trading below its IPO price and I feel relatively good about its ability to make money in an economy where a large portion of the population will be value focused for at least the next year.
Strength of Prediction
My initial odds were 65% that $WISH will be trading above $24 by the end of December 30th. I’ll take a look again in a couple of weeks.
