ContextLogic (NASDAQ:WISH) reports its second-quarter earnings Aug. 12. They should have no effect on WISH stock.
That’s because WISH is a different company than it was just a few months ago.
Jacqueline Reses, a former top executive at Square (NASDAQ:SQ), was named executive chair on May 12. She has been rebuilding the C-Suite and creating a new strategy.
The old WISH pitched itself as an online version of Five Below (NASDAQ:FIVE), a place mobile phone users went for bargains and serendipity. The company has its own logistics platform, and 50,000 local merchants use it.
The new WISH will also be a financial technology company. WISH has won a payment services license in the Netherlands, which it can extend across Europe. Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) executive Farhang Kassaei has been made chief technology officer.
A Closer Look at Wish Stock
The man behind Reses, and the other changes at ContextLogic, is Palantir (NASDAQ:PLTR) co-founder Peter Thiel. His venture fund helped launch WISH and the fund is close to Reses. Reses is also on the board of Affirm (NASDAQ:AFRM), the buy now, pay later (BNPL) platform.
BNPL is the new hotness in payments. Instead of putting expensive goods on a credit card, paying up to 20% interest, consumers commit to paying off purchases over four months, interest-free.
As with other “disruptive” innovations, this has the effect of removing protective guardrails. In this case, it puts merchants on the hook instead of banks if the customer doesn’t pay.
Square’s purchase of Afterpay made the markets swoon. It crashed the whole Visa (NYSE:V) led payments sector. This is despite the fact that Visa (and the processors associated with it) is creating APIs to support BNPL and signing up banks for it.
Square is now worth $129 billion, more than any payment company not named Visa or MasterCard (NYSE:MA). Visa, in turn, is worth more than JPMorgan Chase (NYSE:JPM), the country’s largest bank.
The New WISH
Investors are being told to ignore what WISH is and focus on what it will be.
The current company will report a loss on sales of $723 million, according to analysts. WISH stock is down 62% for the year. Only six analysts follow it at Tipranks and only two of them say buy it. WISH stock went public last December at $24 per share. It trades today at about $7.
The price collapse was due to its being a meme stock, as I reported in June. Meme stocks are the new Wall Street game of pump-and-dump. The difference is that small investors are enlisted to pump them on Reddit and then, often, left holding the bag. (You’ve got to know when to sell, kids.)
The C-Suite moves and fintech dreams change the story. Now, according to our Chris MacDonald, WISH stock is a rocket ship.
China’s moves against Alibaba (NASDAQ:BABA) mean it can freely recruit Chinese merchants to its platform. With WISH getting almost half its revenue from Europe, the fintech move can quickly drive profits.
Not everyone is a believer. Continuing losses remain a worry. The resignation of CFO Rajat Bhari is another concern.
The Bottom Line on WISH Stock
Bargain hunters are going to pile into ContextLogic as word gets around about its fintech designs and the star power of Thiel and Reses takes hold with investors.
If it can just stop the losses, it’s a bargain, an online store selling at under twice its sales. The new ContextLogic will be sold to investors as a combination of Affirm, Pinduoduo (NASDAQ:PDD) and Shopify (NASDAQ:SHOP).
Whether it can fulfill any of those promises remains to be seen.
On the date of publication, Dana Blankenhorn held a long position in BABA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Living With Moore’s Law: Past, Present and Future available at the Amazon Kindle store. Write him at firstname.lastname@example.org or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.
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