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Wish is set to price the IPO at least in the high end

By on March 11, 2021 0

Online retailer Wish fell 16% in its business debut on Wednesday, in a more low-key start to life as a public company than for DoorDash Inc. and Airbnb Inc. last week.

Wish shares opened at $ 22.75 each, below the $ 24 they were sold for in its initial public offering at the top of a marketed range. The shares closed at US $ 20.05, giving the company a value of approximately US $ 14 billion on a fully diluted basis, which includes options and restricted stock units as well as the outstanding shares listed. in its documents.

The offer, the 31st on a U.S. stock exchange to surpass $ 1 billion this year, follows DoorDash and Airbnb’s successful business debuts last week. DoorDash climbed 86% after its $ 3.14 billion bid, while Airbnb closed its first day up 113% after a $ 3.83 billion IPO, including so-called “stocks”. greenshoe ”.

“We are focused on getting the right value and getting the right investors on board to really allow us to pursue our long-term vision,” said Peter Szulczewski, CEO of Wish Parent ContextLogic Inc., in an interview before the start of negotiations.

Both DoorDash and Airbnb shares fell this week, which may have been a factor in Wish’s mixed reception, said Kathleen Smith, director and manager of IPO exchange-traded funds at Renaissance Capital. Smith said the performance of last week’s listings “gives investors a lesson” on open buying.

Find out more: Wish, the online dollar store, loses momentum ahead of IPO

Wish is also part of a competitive landscape. While ecommerce stocks have traded well this year, some investors are comparing Wish to Amazon.con Inc., which Smith says has a similar rate of growth. “If I can own Amazon, why should I own Wish?” She added.

According to data compiled by Bloomberg, only 16 of the 82 IPOs that raised $ 500 million or more this year on U.S. exchanges fell on their first day of trading. The latest to do so was the Chinese financial services platform Lufax Holding Ltd. October 30.

Amazon, EBAY

At its IPO price, Wish is trading at around four times its expected sales in 2022, according to a person familiar with the matter. Amazon is trading at 3.6 times its sales estimates for 2021, according to data compiled by Bloomberg. EBay Inc. is trading at 3.37 times the same metric. A representative for Wish declined to comment.

Wish board member Hans Tung, managing partner of GGV Capital, said he was not worried about competing with Amazon. “I was making my living as a venture capitalist who bet on being anti-Amazon,” he said.

Tung said he was also not concerned about the first day of trading. He noted that Peloton Interactive Inc., in which he was also an investor, fell in its early days last year and is now trading at more than four times its IPO price. GGV does not sell any shares of Wish, he said. Tung compared Wish to Pinduoduo Inc., the Chinese e-commerce company that has grown 665% since its US debut in 2018. The strong market performance of traditional Dollar General Corp. chains. and Dollar Tree Inc. shows the potential of this niche, he said.

December record

Online lender Upstart Holdings Inc. rose 47% in its trading debut on Wednesday after valuing its IPO at the low end of a marketed range to raise $ 240 million. More than US $ 22 billion has now been raised in IPOs on US stock exchanges in December, a record for the month. The total for 2020 is now over $ 174 billion, also a record high, the data shows.

Two other consumer-focused web companies, online video game company Roblox Corp. and installment loan provider Affirm Holdings Inc., are also pursuing IPOs. Roblox has told its employees it is postponing its IPO until next year.

Wish differentiates itself from other online retailers by focusing on value-conscious consumers, according to its statements.

Founded in 2010 by Szulczewski and Danny Zhang, who met at the University of Waterloo in Ontario, Canada, Wish connects sellers and potential buyers of everything from clothing to electronics and kitchenware. ContextLogic has other online marketplaces, including Geek, Mama, Home, and Cute, according to the Wish website.

Sales, Losses

Wish’s losses, as well as its sales, increased during the coronavirus pandemic, according to its documents. It recorded a net loss of US $ 176 million on revenue of US $ 1.7 billion in the first nine months of this year, compared to a net loss of US $ 5 million on revenue of 1.3 billion US dollars over the same period in 2019.

Wish’s parent company, San Francisco-based ContextLogic, sold 46 million shares on Tuesday for US $ 24 each, raising US $ 1.1 billion. The offering was led by Goldman Sachs Group Inc., JPMorgan Chase & Co. and Bank of America Corp. The shares trade on the Nasdaq Global Select Market under the symbol WISH.

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