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

Wayfair: Not Too Late To Be Bullish

Jun. 10, 2020 10:23 AM ETWayfair Inc. (W)91 Comments
Value Kicker profile picture
Value Kicker


  • Wayfair has a huge total addressable market and is currently the market leader with regard to online furniture sales.
  • Wayfair has a handful of competitive advantages and is adding more to that moat.
  • Wayfair has increased a lot in the past few weeks; however, there is still some upside from the current price.

Online retailers have had a fantastic run lately. The "stay at home" sales surge has propelled these stocks to new highs. I wanted to explore one such stock, Wayfair (NYSE:W) to see if the hype is warranted and if an investment opportunity is present.

Wayfair had a blockbuster Q1 2020 due to the bulk of the population being forced to stay at home due to the coronavirus lockdowns. Revenue increased by 20% from last year and is now at $2.3 billion. Gross margins were 25% and gross profit was $579 million. Despite the blockbuster quarter, the company posted a net loss of -$3.04 per share. The loss this quarter was higher than the loss of Q1 2019 which was -$2.20. The company has been losing money since the start of its existence.

The increase in the net loss has caused a few authors in Seeking Alpha to be bearish on the stock. However, digging further into the company's disclosures, we can see that the company has been improving on all the metrics needed for its future success. The number of active customers reached 21 million which is an increase of 28.6% from last year. This doesn't even include the bump due to the coronavirus lockdowns. The company announced it actually had an even better April where sales were up by 90% due to quarantined people buying home office furniture and cookware. In fact, in the early days of the lockdown, Amazon (AMZN) deliveries took longer than usual and prioritized essential products, for a good while Wayfair was one of the only furniture retailers still in operation.

While the absolute increase in number of active customers is important, it is equally important for the company to actually retain those customers and keep them coming back to the platform. This retention rate is important

ChartData by YCharts

This article was written by

Value Kicker profile picture
Nine to 5 by day. Hobbyist stock trader by night. I got an MBA and a CFA ... so that should count for something. I only care about my own greedy interests and I love feeding trolls. Not your financial advisor. Information for entertainment purposes only. Diamond hands are forever.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in W over 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.

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

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.