ContextLogic (WISH) stock was under pressure on Monday, falling 9.4% to close at $4.85.

Despite being one of the most popular mobile shopping applications, with over 90 million monthly active users, the company has struggled to get investor love after reporting dismal second-quarter earnings on August 12.

It was disappointing for investors to see that total revenues declined 6% on a year-over-year basis. Furthermore, the net loss grew considerably, to $111 from $11 in the year-ago quarter.

As a result of the company's poor performance, the stock price dropped almost 20% after the earnings release. (See ContextLogic stock charts on TipRanks)

So far this year, ContextLogic stock has lagged the broader markets. Its stock is down about 68% over the past six months and is down 75% on a year-to-date basis.

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Why the Downfall?

The recent drop in ContextLogic’s share price was partially prompted by analyst Jason Helfstein from Oppenheimer, when he downgraded his rating on the stock.

Helfstein pulled down the rating on ContextLogic’s stock to Sell from Hold and set a price target of $4.00. This implies 17.5% downside potential to current levels.

The five-star analyst predicts that the company is facing a "perfect storm of negative challenges" over the coming months. He remained concerned about the rapidly rising shipping costs and a decline in user retention rates. Furthermore, he stated that “with ad budgets shifting to Android, digital ad costs have remained elevated throughout 3Q, impacting customer acquisition/retention."

Investors’ sentiment remains weak on ContextLogic, owing to a decrease in active buyer numbers, increasing competition from physical shops, and higher digital advertising costs, among other factors.

Notably, TipRanks’ Stock Investors tool indicates that investors currently have a Very Negative outlook on ContextLogic stock, with 4.7% of investors who hold portfolios on TipRanks decreasing their exposure over the past 30 days.

Story continuesWall Street’s Take

On TipRanks, ContextLogic stock has an analyst rating consensus of Hold, based on 2 Buys, 5 Holds, and 3 Sells.

As for the price targets, the average WISH price target of $9.17 implies 89.1% upside potential to current levels.

Disclosure: On the date of publication, Shalu Saraf had no position in any of the companies discussed in this article.

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