that does business as the e-commerce site Wish, fell 16% on the first day of trading on Wednesday. The stock did not trade above the $ 24 stock price, making it a broken deal.
According to its IPO prospectus, the San Francisco startup connects more than 100 million active users in more than 100 countries every month with 500,000 merchants selling 150 million items. Most Wish merchants are based in China and typically sell discounted unbranded products such as T-shirts ($ 2.20), masks ($ 2.60), or teeth whitening gel pens ($ 3). Wish reportedly takes up 15% of every transaction.
At the end of Tuesday, Wish (ticker: WISH) raised $ 1.1 billion after pricing its deal at the top of its expected range. The ecommerce retailer sold 46 million shares for $ 24 each, the top end of its range from $ 22 to $ 24. Underwriters on the deal include
and BofA Securities.
The stock opened at $ 22.75 on Wednesday and fell to a low of $ 19.48. Shares closed at $ 20.05, down 16.5%, which would give the company a market capitalization of $ 14.3 billion.
Wish’s disappointing performance comes just a week since its blockbuster deals
(DASH). Airbnb, which raised $ 3.5 billion on its IPO, rose nearly 113% during its market debut on December 10. DoorDash, meanwhile, collected $ 3.37 billion and jumped 86% on the first day of trading on December 9.
Wish wasn’t the only company to go public on Wednesday.
(BCAB) also open for trading.
Wish has moved to take more control of its logistics platform by 2020, said Peter Szulczewski, a former Google executive who works with Yahoo! veteran Danny Zhang in 2010. Earlier, the retailer had its merchants arrange their own shipping. But during the 12 months ending September 30, Wish helped ship more than 640 million items to buyers in more than 100 countries. More than 90% of packages purchased on the platform used Wish’s logistics platform, up from zero in 2016, the prospectus said.
There were several reasons for the shift. The retailer was one of the first companies to feel the impact of the Covid-19 pandemic when its supply chain in China went down in January. “No one could have predicted that,” said Szulczewski, Wish’s CEO.
The company also faced changes in global postal regulations and an increase in cross-border sales volume, forcing it to take more control over logistics. And with changes to the Universal Postal Convention earlier this year, Wish’s Chinese merchants are likely to face higher shipping charges.
Improving logistics gave Wish “the conviction that the work is possible and what the consequences are [of it] to go out as a public company this year, ”said Szulczewski.
Wish is up against rivals such as
Alibaba Group Holding
(BABA). Both have tried to buy Wish, according to news reports. “There are many different types of rumors,” said Szulczewski Barron’s. “We are focused on our mission and love to operate as an independent company.”
The start-up is not at all to blame, Szulczewski said. However, losses for Wish amounted to $ 176 million for the nine months ended September 30, compared to $ 5 million for the same period in 2019. Revenue increased nearly 32% to $ 1.7 billion for the nine months ended September 30 from $ 1.3. billion for the period of a year ago.
Wish partners with 50,000 local brick-and-mortar stores in 50 countries, who have uploaded their store inventory for local pickup and delivery. These stores also serve as pickup locations for online Wish orders, he said. Many of these locations are little mom-and-pop stores, and Wish is helping them “survive and thrive during a super challenging decade,” Szulczewski said. The company wants to add more stores, he said.
Wish also plans to expand into new markets, he said. “Wherever value-conscious consumers are on smartphones, we want to get into that,” said Szulczewski. This could be Latin America, Africa or the Middle East, he said.
Write to Luisa Beltran at [email protected]