ContextLogic Down 4.3% Despite Q3 Beat

American e-commerce platform ContextLogic, Inc. (WISH) reported better-than-expected third-quarter results, with earnings and revenue exceeding expectations.

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However, shares fell 4.3% during the extended trading session on November 10, after the company announced the resignation of its CEO, and offered a weak revenue outlook for the fourth-quarter due to reduced advertising spend.

Better-Than-Expected Results

WISH reported a quarterly loss of 10 cents per share, 4 cents better than analysts’ estimated loss of $0.14 per share. The company posted a quarterly loss of $0.92 per share in the same quarter last year.

Furthermore, revenue came in at $368 million, a 39% year-over-year reduction, yet surpassing Street estimates of $360.82 million.

Compared to Q3FY20, all segments of the company witnessed a sharp decline in revenue. Notably, Core Marketplace revenue was down 55% and Marketplace revenue fell 52%.

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CEO Transition

WISH also announced the resignation of CEO Piotr Szulczewski, effective on or before February 1, 2022 , provided a suitable successor is selected. He will continue to be a part of the company’s Board of Directors.

Management Comments

Jacqueline Reses, Executive Chair at Wish, said, “The foundation of that plan is to improve and maintain trust with our buyers, and to provide a differentiated and engaging buying experience. In doing so, we expect to drive long-term growth and sustainable unit economics for our eCommerce platform.”

She concluded, “By redoubling our focus on our most frequent buyers, we’re learning what features and products are most likely to catalyze our entire user base to engage and buy on Wish. We are confident in our ability to return to growth during the second half of 2022, while creating significant shareholder value over time.”

Guidance

Due to the ongoing reduction in advertising spend, WISH expects Q4 revenue to be lower than Q3 figures despite the holiday season. The company’s revenue was down 20% in October, against the average monthly revenue in Q3 adjusted for the same number of days.

Street Consensus

Overall, the stock has a Hold consensus rating based on 2 Buys, 5 Holds, and 3 Sells. The average ContextLogic price target of $8.61 implies 68.82% upside potential to current levels. Shares have lost 74.6% over the past year.

Website Traffic

TipRanks’ Website Traffic tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into WISH’s performance.

In October, ContextLogic website traffic recorded a 55.03% monthly decline in visits, against the same quarter last year. Similarly, year-to-date website traffic growth decreased 3.02%, against the same quarter last year.