Customer Growth
There has been a steady uptick in Wayfair’s user base, but it suffers from elevated costs that eat into margins. Benefits of the ongoing expansion program, which involves heavy investment, are yet to show up. CEO Niraj Shah has a bullish view and sees solid expansion in overseas markets, especially in Germany and the UK where sales grew in double-digits in 2019.
Growth Plan
The general perception is that the efforts to expand shipping service and ramp up the distribution network, combined with cost-cutting, are setting the stage for a turnaround. The steady uptick in orders complement these initiatives. The superior brand value and growing global footprint should give Wayfair the necessary strength to tide over the present crisis.
Call for Caution
Analysts are divided in their recommendations, though the average price target points to a decent uptick in value. Brokerages like Loop Capital, which recently lowered the rating on the company, remain sceptical about the stock’s near-term prospects. The evasive profit and heightened uncertainty make the stock risky but those looking for a long-term deal will not be disappointed.
[irp posts=”51479″]
Given the company’s positive top-line performance and other
encouraging metrics, the stock’s weak performance looks exaggerated. The bottom-line
remained in the negative territory throughout 2019 and the company ended the
year on a dismal note. Fourth quarter adjusted loss widened to $2.50 per share
and missed the Street view, despite a 26% growth in revenues to $2.5 billion.
At $47.24, Wayfair’s stock closed the last trading session down 70% compared to last year’s peak. Earlier, it had slipped to a multi-year low.