Wish Wants $1 Billion IPO At Stellar Valuation

Summary

• Wish has filed to raise around $1 billion in a U.S. IPO.
• The firm provides a mobile-first e-commerce platform for merchants in China and elsewhere.
• WISH has grown remarkably but the IPO valuation appears priced for perfection, so I'll watchlist the stock for future review.
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Quick Take

Wish (ContextLogic) (WISH) has filed to raise approximately $1 billion in an IPO of its Class A common stock, according to an S-1 registration statement.

The firm has developed a mobile-first ecommerce platform for consumers and merchants in China, North America and in other regions.

WISH has produced impressive revenue growth and has a strong industry outlook in its favor.

However, the IPO appears extremely expensive, so I'll watch the IPO from the sidelines.

Company & Technology

San Francisco, California-based Wish was founded to empower merchants to effectively engage with prospective customers via the firm's mobile ecommerce platform.

Management is headed by founder, Chairman and CEO Peter Szulczewski, who was previously in various roles at Google

The company’s primary offerings include:

• Sell on Wish

• Wish Local

• Wish App

Wish has received at least $1.5 billion from investors including DST Global, The Founders Fund, Formation8 Partners, GGV Capital and Republic Technologies.

Customer/User Acquisition

Wish acquires users through major mobile app downloads and online marketing.

The firm has over 100 million monthly active users [MAUs] in over 100 countries with more than 500,000 merchants selling 150 million SKUs.

Sales and Marketing expenses as a percentage of total revenue have been dropping as revenues have increased as revenues have increased, as the figures below indicate:

Sales and Marketing	Expenses vs. Revenue
Period	Percentage
Nine Mos. Ended Sept. 30, 2020	64.4%
2019	77.0%
2018	91.2%

Click to enlarge

Source: Company registration statement

The Sales and Marketing efficiency rate, defined as how many dollars of additional new revenue are generated by each dollar of Sales and Marketing spend, has risen markedly to 0.4x in the most recent reporting period, as shown in the table below:

Sales and Marketing	Efficiency Rate
Period	Multiple
Nine Mos. Ended Sept. 30, 2020	0.4

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.