Why did ContextLogic take a massive dive this week?
The parent company of e-commerce app Wish saw its stock price take a huge hit after law firm Hagens Berman urged investors to file loss claims ahead of an impending deadline.
- ContextLogic Inc (NASDAQ: WISH) share price encountered a roadblock this week, as it sunk 16%
- The decline came after US law firm Hagens Berman issued a press release urging investors who have suffered significant losses since purchasing shares during WISH’s IPO to come forward
- The lawsuit’s main complaint alleges that ContextLogic overstated its business performance metrics and financial prospects
- These disclosures allegedly caused the WISH’s share price to ‘decline sharply’
- Ready to trade ContextLogic shares? Open a trading account with us today.
WISH share price: What’s the latest?
ContextLogic shares have declined nearly 16% since US law firm Hagens Berman urged investors to submit their loss claims earlier this week, ahead of a 16 July 2021 plaintiff deadline.
‘A securities class action is pending and certain investors who purchased shares in the company's December 2020 IPO or on the open market may have valuable claims,’ Hagens Berman said in a press release on Tuesday (29 June 2021).
The complaint alleges that ContextLogic's initial public offering (IPO) registration documents materially overstated the company's business metrics and financial prospects. Specifically, the IPO registration documents touted ContextLogic's exponential monthly active user (MAUs) growth, claiming its then 108 million MAUs was a key driver of revenue growth.
According to Hagens Berman, by the time of its December 2020 IPO, ContextLogic's MAUs had declined materially and the IPO registration documents failed to disclose this known trend reasonably likely to materially impact ContextLogic's profitability.
Then on 08 March 2021, the company reported what the media release termed as ‘disappointing 4Q 2020 and full year 2020 results’. WISH disclosed that its MAUs had already ‘declined 10% YoY during Q4 to 104 million’.
Following that, on 12 May 2021, ContextLogic announced poor Q1 2021 results, including another 7% drop in MAUs to just 101 million, and the company slashed sales guidance for Q2 2021.
Hagens Berman alleged that these disclosures caused WISH’s share price to decline sharply. The stock is down 37% year to date.
‘We're focused on investors' losses and proving ContextLogic overstated MAUs and concealed known trends,’ said Reed Kathrein, the Hagens Berman partner leading the investigation.
What are analysts’ latest price targets and ratings?
ContextLogic shares are down 8% on Thursday (01 July 2021) alone.
The latest analyst sentiments published by MarketBeat show a consensus rating of ‘buy’ and average price target of US$22.92, which equates to a 86.5% upside potential from the stock’s last traded price of S$12.29.
The latest investment thesis on the stock came from Credit Suisse analyst Stephen Ju, who maintained a ‘buy’ call while cutting his price target to US$24 from US$31.
His lower price target was predicated on the company’s delayed growth trajectory for the second half of 2021.
Stifel analyst Scott Devitt also lowered his firm's price target on ContextLogic to US$12 from US$20 following the company’s self-stated ‘better-than-expected’ quarterly results, while reiterating a ‘hold’ rating.
The analyst readjusted his intermediate and long-term growth assumptions for the platform’s core marketplace revenue, citing the company’s decision to reduce marketing investments in certain geographies and his projections for slower MAU growth than previously stated.
What’s your call on ContextLogic stocks?
Spread bets are completely tax-free, while CFDs are free from stamp duty. You can also buy and take ownership of US shares commission-free with us.
Whether you trade or invest, you’ll get access to pre-market and after-hours trading on 70 US stocks.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Act on share opportunities today
Go long or short on thousands of international stocks with spread bets and CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take advantage while conditions prevail.
Live prices on most popular markets
You might be interested in…
Find out what charges your trades could incur with our transparent fee structure.
Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.
Stay on top of upcoming market-moving events with our customisable economic calendar.