ContextLogic (NASDAQ:WISH) has struggled in the market over the past few weeks as the stock’s meme-fueled rally fizzles out. We expected this. And we think now is a great time to buy WISH stock.
The logo and information for the Wish (WISH) mobile app are displayed on a smartphone.
Source: sdx15 / Shutterstock.com
We’ve been saying for a while now that, while social momentum gave WISH stock a nice rally, it’s ContextLogic’s fundamentals that are what is really worth focusing. In the long term, it’s these fundamentals that will carry WISH to $20.
In the next six months, look for WISH stock to double.
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Our thesis hinges on the fact that online discount shopping will be a huge industry one day. We believe Wish.com has optimally positioned itself as the “dollar store of the Internet.”
Growth trends at the company were adversely impacted earlier in 2021 by the huge reopening of society — pent-up demand to get out and go shopping in-person obviously doesn’t help e-commerce platforms.
But our data suggests the worst of this headwind is over.
According to SimilarWeb, web traffic to Wish.com plunged in early 2021 but has since stabilized in April and May. In June, web traffic actually grew.
iPhone and Android app download trends for the Wish app have also stabilized in recent months.
The Bottom Line on WISH Stock
We think this is the beginning of a reversal of discount shoppers back onto the Wish.com platform. This will lead to favorable second-quarter numbers and management’s third-quarter guide.
On the back of that strong commentary, we believe WISH stock can and will move considerably higher. And the stock is dirt cheap at just 2X forward sales.
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On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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