Shares in discount ecommerce marketplace Wish fell more than 11% on Wednesday’s market debut.
Opening trading was $ 22.75 per share, below the IPO price of $ 24 per share, which was at the high end of expectations. The offer raised $ 1.1 billion and gave the company an initial valuation of more than $ 14 billion. Private investors valued the company at $ 11.2 billion.
ContextLogic, the parent company of Wish, went public last month. Last week the company estimated it would price stocks in the $ 22-24 range, and on Tuesday the price was at the top of that range.
Founded in 2010 by former Google engineer Peter Szulczewski, Wish is an online marketplace with a variety of discounted goods, from cheap housewares and clothing to electronics and toys. The app offers a range of products for just a few dollars to appeal to low to middle income consumers with cheaper options than those found on other sites, including Amazon.
The company’s reputation for selling discounted bells and whistles has earned it comparisons to an online dollar store. But Szulczewski told CNBC on Wednesday that he believes Wish’s “worth is much higher”.
“We are focused on delivering as much value as possible to our consumers and that has served us well,” Szulczewski told David Faber on Squawk on the Street. “We believe this is an underserved population.”
The desire goes public at a time when online sales are skyrocketing as the coronavirus pandemic has led more people to stop traveling to stores to safely shop at home on their smartphone. The trend has resulted in competing ecommerce companies like Amazon, Shopify, and Etsy among the biggest beneficiaries of the pandemic.
The company’s IPO prospectus revealed that it is growing more slowly than online retailers like Amazon and Walmart from a much smaller base. Wish reported revenue of $ 1.75 billion for the nine months ended September 30, a growth rate of 32%, while Amazon posted revenue growth of 38% year over year to $ 48.4 billion in the third quarter. Dollar recorded. In the first nine months of 2020, the company lost $ 176 million.
The offering follows successful Airbnb and Doordash IPOs that skyrocketed on their debuts. Wish’s debut will likely wind up what was already a busy year for tech IPOs, particularly September when a deluge of software companies went public.
ContextLogic works with underwriters such as Goldman Sachs and JP Morgan. The stock is traded on the Nasdaq under the ticker symbol WISH.