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Watching Wayfair Before Q1 Earnings

May 01, 2020 12:57 PM ETWayfair Inc. (W)16 Comments


  • Wayfair reports Q1 earnings May 5 pre-market and has an average one-day movement following earnings of +/-12.37%.
  • Shares have run up 452% as of April 29, sending shares to overbought territory ahead of the earnings report.
  • Consecutive revenue beats have been dampened by EPS missing expectations, and Q1 could see that trend continue.

Wayfair (NYSE:W) reports earnings pre-market May 5, and the bar is set quite high for the retailer. As of April 29, the stock has soared 452.5% from its March 19 close of $23.52, but shares are still 20% off of the 1-year high. Such a rapid move is sending shares towards overbought levels, but a high-percentage one-day earnings move is definitely still in the cards.

Positive Signs Already

As solely an online platform, Wayfair has been able to outperform its other home furnishing peers since it does not rely one bit on in-store sales. On April 6, Wayfair reported that, while at the beginning of March, "gross revenue growth was just under 20%, similar to trends during January and February" but entering into April "growth more than doubled". In that report, the company also mentioned that "it is "accelerating" efforts to become profitable", a vital part of its business model that is lacking integrity at the moment, as the net loss has widened to almost $1 billion for the last fiscal year.

Prior Volatility

Wayfair has had a tendency of large swings following earnings reports. In the past 8 reports, Wayfair has closed lower on 5 of the 8, with the past 4 quarters all in that group. Wayfair's largest move was +27.86% last February and the smallest -1.19% last August. Average next-day closes following earnings are +/-12.37%, although the stock tends to make large intra-day swings as well (the previous earnings report in February closed -10.15%, but opened ~-24%).

As we've seen recently, Wayfair, as well as the market, has had some pretty large moves in the past two months, and this earnings report and trading day for Wayfair could be accelerated by market movements. Wayfair's report of surging growth rates in March definitely could already be priced in, but all eyes will be on

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