Wish Parent ContextLogic has just debuted below the IPO

It is unusual for a company to trade below its IPO on the first day, especially on a large offer. Prior to the listing of Wish, only 13 of the 85 UCIs listed in the U.S. valued at $ 10 billion or more declined on the first day of trading, according to Dealogic data dating back to 1995.

Wish’s performance shows the challenges subscribers have faced, especially in recent months, in finding the right price for an initial offer. If new investors remain holding losses after the first day of trading, the negative sentiment around the shares may persist. But recently, bank subscribers have been subjected to a check for exit to stock market investments.

When stocks jump like Airbnb and DoorDash did, companies lose billions of dollars they could have raised; instead, they hand them over to investors, some of whom are just there to earn quickly. Last week, Roblox Corp. delayed its scheduled IPO until 2021 due to concerns that the latest events of the first day would make it too difficult to determine the right price for the video game company’s shares.

Wish founder and CEO Peter Szulczewski said in an interview Wednesday before his company’s shares began trading that he wasn’t worried about a possible pop from day one. “To be honest, we’ve never talked about pop,” he said, adding that he felt good about the amount the company raised in supply and pricing.

It’s unclear what led to Wednesday’s sale. According to analysts, the general public’s lack of familiarity with the Wish brand could have been a factor.

“Even when there’s a very hot IPO market, that doesn’t mean everything jumps out,” said Jay Ritter, a professor of finance at the University of Florida. “It looks like investors have decided that the valuation has advanced a bit.”

Founded in 2010, the San Francisco-based company focuses on supplying mass-produced, low-priced items in a wide range of categories, including fashion, appliances and kitchenware. The pandemic has been a big help for e-commerce giants like Amazon.com Inc., as home consumers shop online for work, school and other needs.

Wish has not made any annual profit, according to financial data dating back to 2015, which the company included in a securities presentation, although it was profitable during the first two quarters of 2019.

Its stock offering is expected to be among the last major debuts this year, with a cap on one of the most popular OP markets in history. So far this year, companies have raised more than $ 160 billion in U.S. stock markets, far surpassing the previous full-year record set in 1999 at the height of the dot-com boom. , according to data from Dealogic dating back to 1995.

Shares of Airbnb, which more than doubled on Thursday in its debut, have fallen about 5% from its $ 146 bid price. Shares of DoorDash, which rose 86 percent a day earlier, have fallen 13 percent from its $ 182 IPO.

As in the case of Airbnb and DoorDash, Szulczewski will maintain significant control of Wish. It will have the ability to control about 59.3% of voting power after the bid, the company said.

The company said that this year it has more than 100 million monthly active users, up to five times more than in 2015, in more than 100 countries. Most of its merchants are headquartered in China and the number of sellers of its platform in the United States grew significantly from 2019, the company said.

During the first nine months of 2020, the company recorded a loss of $ 176 million in revenue of $ 1.775 billion, compared to a loss of $ 5 million in revenue of $ 1.333 billion in the same period. last year. For the third quarter, revenue rose 33% to $ 606 million, while the company lost $ 99 million.

Write to Dave Sebastian at [email protected]