Wish Parent ContextLogic ends debut under IPO price

It is unusual for a company to trade below its IPO price on day one, especially with a large supply. Before Wish’s listing, only 13 of the 85 publicly traded IPOs worth more than $ 10 billion fell on the first day of trading, according to Dealogic data dating back to 1995.

Wish’s performance highlights the challenges insurers have faced, especially in recent months, in finding the right price for an initial offer. If new investors keep losses after the first day of trading, the negative sentiment around the stocks can linger. But recently, bancassurance companies have come under scrutiny for underpricing for IPOs.

When stocks rise, like Airbnb and DoorDash’s, companies are missing out on billions of dollars they may have raised; instead, they give them to investors, some of whom are only in it to make a quick buck. Roblox Corp. postponed its planned IPO to 2021 last week over concerns that recent first-day pops made it too difficult to determine the right price for the video game company’s stock.

Wish founder and Chief Executive Peter Szulczewski said in an interview on Wednesday before his company’s stock began trading that he was not concerned about a possible first-day pop. “To be fair, we never talked about the doll,” he said, adding that he felt good about the amount the company raised with the offering and the prices.

It is unclear what led to the sale on Wednesday. Analysts say the general public’s lack of awareness of the Wish brand could have been a factor.

“Even if there is a very hot IPO market, that doesn’t mean everything is jumping up,” said Jay Ritter, a professor of finance at the University of Florida. “It seems investors decided that valuation was a bit ahead of the curve.”

Founded in 2010, the San Francisco-based company focuses on providing mass-produced, inexpensive items across a range of categories such as fashion, gadgets and kitchenware. The pandemic has been a boon to e-commerce giants such as Amazon.com Inc., now home-bound consumers are shopping online for work, school, and other essentials.

Wish did not make an annual profit, according to financial data dating back to 2015 that the company has filed in a securities deposit, although it was profitable for the first two quarters of 2019.

The stock offering is expected to be one of the last major debuts this year, caps one of the most popular IPO markets in history. So far this year, companies have raised more than $ 160 billion on US stock exchanges, far more than the previous year record set in 1999 at the height of the dotcom boom, according to Dealogic data dating back to 1995.

Airbnb shares, which more than doubled on their debut Thursday, are down about 5% from their $ 146 offer price. DoorDash shares, which were up 86% the day earlier, are down 13% from their IPO price of $ 182.

As with Airbnb and DoorDash, Mr. Szulczewski will retain significant control over Wish. He will have the ability to control approximately 59.3% of the voting rights after the offering, the company said.

The company said it has more than 100 million monthly active users – about a factor of five from 2015 – in more than 100 countries this year. Most of its merchants are based in China, and the number of sellers on its platform in the US has risen significantly since 2019, the company said.

For the first nine months of 2020, the company posted a loss of $ 176 million on sales of $ 1.75 billion, compared to a loss of $ 5 million on sales of $ 1.33 billion in the same period last year. For the third quarter, sales were up 33% to $ 606 million, while the company lost $ 99 million.

Write to Dave Sebastian at [email protected]