Entering text into the input field will update the search result below

Wayfair: It's Only Getting Worse

Mar. 02, 2020 9:14 PM ETWayfair Inc. (W)13 Comments
Bill Maurer profile picture
Bill Maurer


  • Losses increase and cash burn accelerates.
  • Q1 guidance well below expectations.
  • Another capital raise likely needed.

It was nearly a year ago that shares of online retailer Wayfair (NYSE:W) hit an all-time high near $174 a share. As the chart below shows, it's been all downhill since then, and that's despite shares bouncing roughly 20% from last Friday's low. Unfortunately, the company's latest earnings report showed that the company's financial picture is still not improving, and disappointing guidance means investors will likely need to brace for another funding round.

(Source: Yahoo! Finance)

For the fourth quarter of 2019, total revenues came in at more than $2.53 billion. That was up more than 25% over the prior year period, and was in-line with street estimates. International revenue growth was more than 37%, but this is just a small fraction of the company's total. The number of active customers was up almost 34%, with the average order total and orders per customer up slightly. Repeat customers were an even larger part of the business than in Q4 2018.

Unfortunately, it's the company's expense structure that remains a big problem, something I discussed a few months ago. Gross margins declined by 130 basis points, operating expenses soared more than 43% over the prior year period, and interest costs basically doubled. In the end, the company announced a GAAP net loss of more than $330 million, compared to $144 million in Q4 2018. Even on a non-GAAP basis, the company lost $2.80 per share, up from a $1.12 loss a year ago. This adjusted figure missed street estimates by 15 cents.

In the end, the company lost more than $8 per share on a non-GAAP basis. That's a $740 million adjusted loss, more than doubling the $365 million seen for all of 2018. The worst part of this is that the miss of street estimates came despite estimates plunging over time, as the chart below shows. At the end

This article was written by

Bill Maurer profile picture
I am a market enthusiast and part-time trader. I started writing for Seeking Alpha in 2011, and it has been a tremendous opportunity and learning experience. I have been interested in the markets since elementary school, and hope to pursue a career in the investment management industry. I have been active in the markets for several years, and am primarily focused on long/short equities. I hold a Bachelor of Science Degree from Lehigh University, where I double majored in Finance and Accounting, with a minor in History. My major track focused on Investments and Financial Analysis. While at Lehigh, I was the Head Portfolio Manager of the Investment Management Group, a student group that manages three portfolios, one long/short and two long only. I have had two internships, one a summer internship at a large bank, and another helping to manage the Lehigh University Endowment for nearly a year. Disclaimer: Bill reminds investors to always do their own due diligence on any investment, and to consult their own financial adviser or representative when necessary. Any material provided is intended as general information only, and should not be considered or relied upon as a formal investment recommendation.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Investors are always reminded that before making any investment, you should do your own proper due diligence on any name directly or indirectly mentioned in this article. Investors should also consider seeking advice from a broker or financial adviser before making any investment decisions. Any material in this article should be considered general information, and not relied on as a formal investment recommendation.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (13)

Best On The Street profile picture
unfortunately Amazon exists so comparing this to old Amazon when there blue skies is fraudulent. This is a 0.
I will take it a step further-Negativ- 100 meters under see level. 20$ is coming in 10 weeks...the game over at end of the year
Does this remind you of Amazon? The key is rapidly growing loyal customers. Gradually, they will create word-of-mouth consistent hoards of enthusiasts and taper off the advertising. Also reminds me of IKEA.
ckarabin profile picture
Their accumulated deficit is simply stunning! It's a certain bankruptcy. Even if they completely eliminated ALL advertising, they'd still lose money. But heavy advertising is the only thing keep sales up. They are at the end of the line, no other options other than bankruptcy. I like how in their shareholder letter the CEO says "we are pleased to announce" and then goes on to announced a stunning loss.
Whtmtn profile picture
It’s a great business. New paradigm for furniture buying. Love this business. Your position says it all. If convicted you should short.
Bill Maurer profile picture

And if I was short I'd get attacked for trying to drive the price down.
Whtmtn profile picture
Andrew Left and Citroen has already done that. Time for real conviction.
Bill Maurer profile picture

I don't maintain positions in anything I write about. Long or short.
Djreef1966 profile picture
Whtmtn profile picture
500 out of what 17,000? BFD. This company will move toward profitability and crush shorts.
I am so surprised at the 22% gross margins. I have been posting on your board for 3 years. It is really easy to figure out $W is going to BK court. You have to hand it to the founders for sucking all the cash out of foolish retail investors.
excellent point Tim...founders will sell any share that will be available in a blink of the eye. I disagree regarding retail investors...most of the shares are own by institutions
Total debt is close to $2B. With the projected loses for 2020 and first round of debt coming due in 2022, why would anyone give this company more capital?
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

About W

SymbolLast Price% Chg
Market Cap
Yield (TTM)
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on W

Related Stocks

SymbolLast Price% Chg
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.