|Bid||N/A x N/A|
|Ask||N/A x N/A|
|Day's Range||0.2872 - 0.2872|
|52 Week Range||0.1500 - 0.5000|
|Beta (5Y Monthly)||1.41|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
ContextLogic, parent company of e-commerce retailer Wish, is the next initial public offering looking to raise more than $1 billion. The wish IPO prices late Tuesday and trades Wednesday.
(Bloomberg) -- A global pandemic should theoretically be perfect timing for an e-commerce company to go public because homebound shoppers have fueled a record-breaking surge in online sales.At least that’s what Wish.com is counting on.In a filing last week, the upstart web store best known for cheap trinkets shipped direct from China said it plans to sell 46 million shares for $22 to $24 each, which would value the company at up to $17 billion on a fully diluted basis. Wish, which is expected to price Tuesday and start trading the following day, could get a lift from the successful public offerings of tech industry counterparts DoorDash Inc. and Airbnb Inc., both of which popped out of the gate.But analysts say there are already signs that Wish, which posted a net loss of $176 million for the first nine months of this year, is losing momentum despite spending heavily on ads to attract customers. Even more worrying, they say, is a recent hike in postal rates between China and the U.S. that could push up the company’s costs.“They’re underperforming the e-commerce market both in the U.S. and Europe,” says Juozas Kaziukenas, founder of the research firm Marketplace Pulse. “That, to me, is a concern.”A Wish spokeswoman declined to make Chief Executive Officer Peter Szulczewski available for an interview, citing the pre-IPO quiet period.The origins of Wish, officially known as ContextLogic Inc., go back to 2010, when Szulczewski and co-founder Danny Zhang started an online advertising company. When that failed to take off, Szulczewski hit on another idea: invitint Chinese merchants to sell cheap products directly to U.S. buyers. The timing was propitious because the community of sellers supplying e-commerce giant Alibaba Group Holding Ltd. were now looking for opportunities abroad. Szulczewski renamed the company Wish.com and in late 2012 began hiring Chinese staff to recruit sellers and handle customer service.Wish grew so quickly in the early years that it attracted the attention of Amazon.com Inc. Chief Executive Officer Jeff Bezos. Typically, when a potential rival emerges, the Seattle giant strikes up a relationship with the upstart, the better to get a look under the hood and maybe even see if it’s worth acquiring. Szulczewski and Zhang were invited to Seattle, where they spent the day describing their vision. The pair got the impression that Amazon executives didn’t think much of their business model. But when Wish continued to grow quickly, Szulczewski was invited to sit down with Bezos. A suspicious Szulczewski declined the meeting and continued to build his company, raising $1.8 billion from investors including GGV Capital, Joe Lonsdale’s 8VC and Founders Fund. (Zhang left Wish last year.)Scrolling through Wish’s feed today, shoppers see a smattering of products, from $8 AirPod knockoffs to 50-cent baby dolls. The items have little in common, except that they’re dirt cheap.Katie Plummer is an Amazon Prime subscriber but sometimes finds herself on Wish buying random items -- mostly for her dogs.Earlier this year, Plummer, 34, bought flashing lights for 95 cents to clip onto her mutt Stanley’s collar, so she can see him during nighttime walks. Then she bought a dog whistle and a $2 seat belt to keep the 35-pound pooch from flying out of the car. Plummer didn’t mind that it took months for Wish to deliver the items to her home in Concord, North Carolina.“Amazon is convenient,” she says. “Wish is more of a dollar store on your phone.”Wish generates about 70% of its sales from impulse buyers, not from searches for specific items, according to a filing. That could be a problem, says Forrester retail analyst Sucharita Kodali, who notes that Wish isn’t entirely comparable to dollar stores, which sell such essentials as groceries that pull people in regularly. And unlike Amazon, she says, Wish doesn’t sell everything.“It’s random tchotchkes,” she says. “It’s cell-phone accessories and skirts. It’s not everything for all people. It’s not even some things for some people.”Despite the stampede online this year, Wish said third-quarter core marketplace revenue -- which includes commissions collected from merchants -- increased 17% compared with the same period last year. That trails the 37% growth in U.S. e-commerce sales during the same period, as logged by the Commerce Department.In its IPO filing, Wish attributed the “moderated” third-quarter revenue growth to pandemic-related issues that slowed deliveries and prompted fewer shoppers to click the buy button. That could be a sign that while Wish’s customers are willing to tolerate extended shipping windows, there is a limit to how long they are willing to wait. It took an average of 62 days for U.S. customers to receive their Wish orders in the second quarter, compared with just 27 days in the first three months of the year. Shipping times improved last quarter, falling to 22 days on average.Meanwhile, sales and marketing expenses are a considerable burden, costing Wish $1.1 billion in the first nine months of this year, or 64% of its $1.7 billion in revenue. And while the company spent a greater percentage of revenue, 78%, on marketing for all of 2019, a company filing acknowledged that these expenses will continue to comprise a majority of operating costs for the foreseeable future.“They are quite literally buying sales,” Kaziukenas says. “I don’t know where that goes in the future, as Facebook and other marketing channels become more expensive. That’s a channel that will continue to eat into any sort of profitability.”For years, Wish benefited from low shipping rates through the Universal Postal Union Treaty, which subsidizes small packages from China. The company notes in the IPO filing that the hike in rates that took effect in July are likely to increase its shipping costs. Unless Wish begins bringing more products wholesale into the U.S. and Europe, it could be difficult to continue selling so many items for less than $5, says Kaziukenas, who researches online marketplaces.Last year, the company launched Wish Local, which lets customers pick up orders from nearby brick-and-mortar retailers. (The stores can sell through Wish, too.) In an interview with Forbes in July, Szulczewski said, “If you think about it, Walmart has about a billion square feet of retail space. If we have a million stores sign up for our service with about 1,000 square feet per store on average, we have a virtual Walmart.” So far, about 50,000 stores have signed on, according to the IPO filing.Ordering from Wish is far from perfect, according to Plummer, the North Carolinian customer. She ordered two “dog mom” key chains in April for 95 cents. They never showed up, so she got a refund in September. She has tried the local pickup option and hit some snags. Her most recent Wish order was a pair of earrings priced at $1 on Oct. 19. She selected a nearby computer store as her pickup location.But because Wish orders take so long to arrive, Plummer usually forgets about them -- which is a problem because Wish gives customers only 15 days to pick them up. Plummer missed the window and was charged a 39% restocking fee.(Updates with timing of pricing and trading in third paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Airbnb Inc. shares more than doubled in their trading debut, propelling the home-rental company to about a $100 billion valuation and one of the biggest first-day rallies on record.The shares closed Thursday at $144.71 up 113% from the $68 initial public offering price. The listing came 10 months after the Covid-19 pandemic upended travel and 24 hours after DoorDash Inc. soared in its public debut.Airbnb joined DoorDash in what is quickly becoming a euphoric moment for new listings in America’s equity markets, egged on by retail investors embracing companies poised to thrive as vaccines promise a loosening of pandemic restrictions.While soaring valuations for IPOs give many market veterans pause, Airbnb, while unprofitable on an annual basis, made money in the third quarter as it cut costs. Out of 200 firms that went public this year, 80% have yet to earn money on an annual basis, according to data compiled by Bloomberg.“I don’t know what else to say,” Airbnb Chief Executive Officer Brian Chesky said in an earlier Bloomberg Television interview, when indications showed the stock could open at more than $139 per share. “I’m very humbled by it.”Airbnb’s market value, based on its outstanding shares, makes it the world’s biggest online travel company. Its $86.5 billion market value narrowly tops Booking Holdings Inc.’s $86.2 billion market capitalization, and eclipses Expedia Group Inc. and TripAdvisor Inc. Airbnb’s market value, about 19 or 20 times its 2021 revenue at the opening price Thursday, also topped that of the four largest public hotel chains combined.San Francisco-based Airbnb’s fully diluted valuation is even higher, around $100 billion including employee stock options and restricted stock units.‘Resilient’ ModelAlfred Lin, a Sequoia Capital partner who sits on the boards of both Airbnb and DoorDash, said the past two days have been a blur. Strong investor demand shows investors recognize Airbnb’s potential, he said.“We’ve seen how resilient this business model is and we’ve seen the company stare into the abyss of a pandemic that shut down global travel and figure their way out of it,” Lin said.DoorDash’s debut surge -- elevating its fully diluted value to about $71 billion -- played a role in Airbnb’s discussion about pricing its IPO above the marketed range, according to people familiar with the matter. An Airbnb representative declined to comment.To hang on to its lofty valuation, Airbnb will need to grapple with a litany of threats, as outlined in its IPO prospectus, ranging from a surge in party houses that carry liability risks to an increase in professionally run properties that lack the charm that made Airbnb rentals famous.IPO RecordAirbnb and DoorDash propelled IPO volume to all-time high for December, surpassing the $8.3 billion mark set for the month in both 2001 and 2003, according to data compiled by Bloomberg.There’s more to come. Other consumer-facing web-based companies set to go public this month include video-game company Roblox Corp., installment loans provider Affirm Holdings Inc. and ContextLogic Inc., the parent of online discount retailer Wish Inc. Those listings will add to what is already a record year for IPOs, with more than $167 billion raised on U.S. exchanges, including Airbnb and DoorDash, the data show.Airbnb’s offering was led by Morgan Stanley and Goldman Sachs Group Inc. Its shares trade on the Nasdaq Global Select Market under the symbol ABNB.Pandemic CrushSan Francisco-based Airbnb has seen a bounce back in domestic bookings since the early days of the pandemic crushed demand.“No year in our history has been as wild and crazy and defining as this year,” Chesky said in an earlier interview, from the original Airbnb apartment on Rausch Street in San Francisco where the idea for the company was born in 2007.In the past 13 years, Airbnb has totally upended the travel market, given people an opportunity for income and created a whole new market for services related to real estate and hosts.The company’s IPO plans were put on hold in March as the pandemic ground global travel to a halt. By April, room bookings and experiences had plunged 72%. Airbnb rolled out a blanket refund policy and doled out more than $1 billion in cancellation fees.By June, though, things were starting to look up. City dwellers who were sick of being stuck inside their homes got in their cars and drove to mountain towns and rural communities, often setting up for weeks or months at a time as work-from-home policies allowed.Domestic BoostInternational travel was down, but demand for domestic, short-distance trips and stays outside of the top 20 cities proved resilient.In the third quarter, Airbnb’s revenue declined only 18%, compared to the near 60% decline for Expedia and Marriott International Inc. The three-month period was also Airbnb’s most profitable ever when adjusted for earnings before interest, taxes, depreciation and amortization.For the first nine months of 2020, Airbnb had a net loss of $697 million on revenue of $2.5 billion, compared with a net loss of $323 million on revenue of $3.7 billion for the same period last year, according to its filings.Reid Hoffman, of early Airbnb investor Greylock Partners, credited the company’s leadership with steering the company through the pandemic crisis. That included making difficult decisions to refund guests while providing partial payments to hosts, even though that had the painful consequence of laying off 25% of its employees, he said.“Today, Airbnb is thriving, and when effective vaccines are broadly available, it will no doubt adapt to those changed circumstances as well,” Hoffman said.Founders’ ControlAirbnb’s four classes of stock give holders of its Class B -- with 20 votes each compared to one each for the Class A shares sold in the IPO -- control of the company.Chesky, with co-founders Nathan Blecharczyk and Joseph Gebbia, will have 42.9% of the company’s voting power, according to its filings. Sequoia Capital will have 16.4% of the voting power, the filings show.Another early investor in both Airbnb and DoorDash, Ron Conway, distinguished current market enthusiasm and valuations from the dot.com bubble era two decades ago.“It’s not like the last bubble where you had companies that were two years old with no revenues getting a $20 billion market cap,” said Conway. “You have companies that are 10 years old with very significant revenues.”(Updates with details in third paragraph on Airbnb’s third-quarter financials)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.