Gone are Wayfair’s pandemic tailwind – News Couple

Gone are Wayfair’s pandemic tailwind

You are reading Entrepreneur United States, an international franchise of Entrepreneur Media. This story originally appeared on MarketBeat

Wayfair slides into a comfortable position

Wayfair (NYSE: W) It was among the most focused companies when it came to the pandemic. Not only does it specialize in home furnishings and décor, it’s just a toy on e-commerce as well. The company saw a nearly triple-digit increase in sales because of that, but that boost ended long ago. Now the company is facing difficulties that make it difficult to get the big picture and this affects share prices. The stock fell more than 5.0% following the weaker-than-expected Q3 report but we have that to say. The COVID bulge may be over, but the long-term outlook remains very strong. Third quarter results are up more than 35% compared to 2019, and the outlook for future growth is good. This pullback to support looks like our entry point.

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“With different geographies reopening after the pandemic, consumers have naturally shifted some spending toward travel and entertainment and from e-commerce to e-commerce. Neeraj Shah, CEO, co-founder and co-chairman, Weaver said: “Our long-term vision has been in sharp focus since epidemic period. The initiatives required to make this happen are in flight, even as we work through near-term macro challenges like supply chain congestion and associated inflation.

Wayfair drops with mixed results

Wayfair had a good quarter if one marred by many comparisons the market would have liked to be better. Net revenue of $3.12 billion declined -18.7% year-over-year and missed the consensus forecast by 370 basis points. The weakness is due to economic reopenings around the world that have caused consumers to shift their focus and dollars to other attractions. As bad as it is, companies are up against a 66.5% increase last year which is well above pre-pandemic levels. Sales were weaker in the US as supply chain hurdles cut deliveries while positive foreign exchange translation in the international segment halved the annual decline to just -6%.

Internally, the metrics are good and point to continued long-term growth. Active customers grew 1.5% year over year with a 7.3% increase in time-limited revenue per customer. The bad news is that orders delivered are down 31% with lower orders, but margins are still holding. The company reported a 150 basis point decline in gross profit margins but came in well above expectations. A GAAP loss of $0.75 outperformed the consensus by $0.10 while the adjusted average of $0.14 outperformed $0.13.

Wayfair is undervalued

If the Marketbeat.com analyst consensus estimate is any guide, the market is dramatically underestimating Wayfair. Even with a string of lower price targets recently, the consensus estimate is running near $311, or more than 23% higher from the recent price action. The recently lowered target comes from Wells Fargo, however, with the stock trading near or very close to $250 in the recent price action.

Technical Outlook: Wayfair is back in support

Wayfair shares fell in the wake of the report but are showing signs of support. Support is appearing above the $240 level and it should be able to keep the price there or move higher in the near to short term. Over the long term, this stock may continue to consolidate at these levels for some time but we don’t think so. Businesses will start to get easier once the current quarter, which is a traditionally strong quarter, will.
Gone are Wayfair's pandemic tailwind

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