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Tim Smith
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Shares in Context Logic Inc. (WISH) – the parent company of discount online-purchasing platform Wish – plunged 13.86% in Wednesday’s extended-hours trading session after delivering disappointing quarterly earnings.

The San Francisco-based company posted a first-quarter loss of $128 million, or 21 cents a share, wider than the 17 cents per share loss Wall Street had expected. This compares to a loss of $66 million in the year-ago quarter. In better news, revenues of $772 million came in above the $743.1 million consensus mark and improved 75% on a year-over-year (YoY) basis.

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Despite Chief Financial Officer Rajat Bahri telling investors that he expects macro conditions to improve this year, Wish’s forward sales guidance fell short of expectations. The company expects Q2 revenues of $715 million to $730 million, while analysts had forecast sales of $759 million. “Last year, the value-conscious consumer demographic was disproportionately affected by the pandemic. As the economy starts to recover, we believe macro trends will have a positive impact on our business,” Bahri wrote, per MarketWatch.

Through Wednesday’s close, Wish stock has a mark value of $7.1 billion and trades 37.12% lower since the start of the year, underperforming the internet commerce industry average by about half over the same period.

Wall Street View

Last month, Evercore ISI analyst Mark Mahaney initiated coverage on the stock with an ‘Outperform’ rating and a $22 price target. Mahaney sees the e-commerce company’s value proposition as its engaging, discovery-based shopping experience. Broker research elsewhere also remains mostly bullish. The stock receives 10 ‘Buy’ ratings and 2 ‘Hold’ ratings. Twelve-month price targets range from $20 to $40, with the shares currently trading 54% under the median target of $25.

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Technical Outlook and Trading Tactics

After breaking above a multi-month downtrend line in late April, the price resumed its move lower. However, the indicator appears to have flipped from resistance into support, with the stock holding above this closely watched trendline. Furthermore, an RSI reading nearing oversold levels increases the likelihood of an upside reversal.

Active traders who take a long position in this area should eye an initial move up to key overhead resistance at $15.50, followed by a possible test of the December swing low at $17.60. Protect capital by exiting if the price closes below the downtrend line.

For a look at today’s earnings schedule, check out our earnings calendar.

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