ContextLogic Inc. (NASDAQ:WISH): Is Breakeven Near?
ContextLogic Inc. (NASDAQ:WISH) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. ContextLogic Inc. operates as a mobile ecommerce company in Europe, North America, South America, and internationally. The US$11b market-cap company announced a latest loss of US$745m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is ContextLogic's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Check out our latest analysis for ContextLogic
According to the 10 industry analysts covering ContextLogic, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$159m in 2023. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 68% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of ContextLogic's upcoming projects, however, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we’d like to point out is that The company has managed its capital prudently, with debt making up -1.1% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on ContextLogic, so if you are interested in understanding the company at a deeper level, take a look at ContextLogic's company page on Simply Wall St. We've also put together a list of important factors you should further examine:
Valuation: What is ContextLogic worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether ContextLogic is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on ContextLogic’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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