One of the most fortuitous calls I've made this year has been in Wayfair (NYSE:W), the Massachusetts-based e-commerce company that focuses on home goods and furniture. Wayfair had long been a hated stock on Wall Street. The stock went counter to the broader market's huge rally in 2019 and steadily declined all year, with investors complaining that despite Wayfair's scale the company had long been unable to turn a profit (never mind that investors gave broad leeway to companies like Tesla (TSLA) in a similar position). Then when the coronavirus hit, investors assumed lower consumer spending would hit Wayfair even harder and sent shares at one point to the $30s (we know now, however, that the coronavirus has in fact been a gift to Wayfair's business).
Now, shares of Wayfair have approximately doubled year-to-date, eclipsing gains in the broader market:
The biggest driver here, of course, is Wayfair's completely-rewritten growth trajectory. Wayfair's Q1 revenue growth of 20% y/y soared far past Wall Street's dour expectations, but that's just the tip of the iceberg. In commenting on Wayfair's first-quarter results, CFO Michael Fleischmann was almost dismissive, noting that "as you think about our financial progress in Q1, it's important to keep in mind that COVID-19 related changes are minimal in the just reported quarter and will be much more impactful in Q2." That is, so far through Q2, Wayfair's gross revenue was up at about a ~2x pace - more or less justifying the doubling of the stock in the year-to-date.
The bullish thesis for Wayfair has two pieces. On the one hand is its growth. The coronavirus has been a watershed moment for Wayfair. As physical retail has tanked, customers are (unsurprisingly) turning more and more to the internet for all of their shopping needs. Services like Redfin (RDFN
