Wish shares fall in trading debut

Ecommerce site Wish’s stock fell in its first trades on the Nasdaq exchange on Wednesday, in a contrast to a succession of blockbuster technology listings this year.

Shares in ContextLogic, which does business under the name of Wish, had dropped as much as 14 per cent from their initial public offering price of $24 by mid-afternoon. The company raised about $1.1bn at that price on Tuesday evening, giving it an implied market capitalisation of $14bn.

Wish’s offering came on the heels of Airbnb and DoorDash’s successful market debuts, which revived memories of the dotcom era and signalled the willingness of public investors to buy into fast-growing but lossmaking tech companies.

Investors showed less enthusiasm for Wish, which operates an online marketplace largely known for discounted items originating in China, catering to low and middle-income consumers. The company said its proprietary algorithms keep users engaged with a personalised feed of products, resulting in about 1.8m sales a day.

Wish chief executive Peter Szulczewski drew comparisons to the social media company Facebook, whose shares also fell on their first day of trading following a blockbuster IPO in 2012.

“I was an investor in Facebook early on. That worked out well,” Mr Szulczewski said. “I don’t think we’re any different than we were when we did our roadshow. I’m not even sure what the stock price is now, but I had gone into this with the strategy of not paying attention to short-term volatility.”

Investors should judge Wish on its long-term performance, he said.

The San Francisco-based company has faced some criticism for the quality of products on its site, which often take weeks to ship to customers. In 2014 PayPal temporarily stopped processing payments on Wish’s website “as a result of concerns related to products listed on our platform”, the company wrote in its prospectus.

The company is also largely reliant on Chinese supply chains and warned investors about risks arising from US-China trade tensions.

Wish had historically benefited from the Universal Postal Union Treaty, which allowed for low-cost shipping on items from China but was redrawn in July.

Mr Szulczewski said Wish had taken more control over getting products to its customers and now handled more than 90 per cent of shipments itself, after handling none as recently as 2016.

Wish recorded deepening net losses in the first nine months of this year, rising to $176m from $5m during the same period in 2019. It said it made more than $1.7bn in revenues in the first nine months of this year.

The company’s IPO and first trades implied a lower market capitalisation than the estimates some bankers had at one point cited, which had ranged from $25bn to $30bn. Private investors previously valued Wish at $11.2bn in a round of funding last year led by the investment firm General Atlantic.

Both Airbnb and DoorDash experienced large first-day trading “pops”, alarming some advisers and executives of companies that had been preparing for IPOs this month.

David Baszucki, chief executive of gaming company Roblox, said in an email to employees on Friday that he was kicking his company’s listing into the new year and was working with advisers to make “improvements” on the process. Roblox had been expected to list its shares before the end of the year.

Mr Szulczewski owned a stake valued at more than $2.5bn in Wish at the IPO price. He will also retain control over the company through a dual-class voting structure.

Goldman Sachs, JPMorgan and Bank of America served as the lead underwriters on Wish’s offering.