ContextLogic’s 1Q Revenue Outlook Exceeds Expectations After 4Q Beat; Shares Rise

Shares of ContextLogic were up 4.8% in Tuesday’s pre-market session as the online e-commerce platform provided 1Q revenue guidance that topped the Street’s estimates. Meanwhile, 4Q revenues beat analysts’ expectations.

ContextLogic’s (WISH) revenues increased 38% year-on-year to $794 million and came in ahead of analysts’ expectations of $736.1 million. Top-line growth was driven by robust demand for its Marketplace and Logistics services.

Core marketplace revenue per active buyer in 4Q rose 66% year-over-year and grew 25% from 3Q levels. The company’s CEO, Peter Szulczewski, said, “Our efforts to improve buyer monetization and engage with high lifetime value customers drove strong year over year and sequential growth in Core Marketplace Revenue per Active Buyer.”

However, the company reported a loss of $3.04 per share in the fourth quarter, compared to a loss of $1.20 per share in the year-ago quarter. Analysts were anticipating a loss of $3.03 per share. ContextLogic reported an adjusted EBITDA loss of $118 million, wider than the year-ago loss of $116 million.

As for 1Q, ContextLogic forecasts revenues in the range of $735-750 million, much higher than consensus estimates of $668.3 million. (See ContextLogic stock analysis on TipRanks)

Following the results, Oppenheimer analyst Jason Helfstein lowered the stock’s price target to $25 (56.8% upside potential) from $30, “on broad peer multiple compression, despite a solid inaugural earnings print and outlook, that should quell investor concerns over recent volatility around revenue.”

In a note to investors, the analyst said, “We believe WISH will continue to invest heavily in scaling Logistics offering (Logistics-as-a-Service pilot launched in 4Q). While this may yield gross margins structurally lower than today, we believe it offers significantly higher profit potential.” Helfstein maintained a Buy rating on the stock.

Overall, consensus among analysts is a Strong Buy based on 9 Buys and 3 Holds. The average analyst price target of $24.90 implies upside potential of over 56% to current levels. Shares have declined 20.5% since the company was listed on the NASDAQ on Dec. 16, 2020.

Furthermore, TipRanks data shows that financial blogger opinions are 75% Bullish, compared to a sector average of 69%.

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