ContextLogic Inc. (WISH) stock prices soared by a massive 49.87% as of the market closing on June 8th, 2021, bringing the price per share up to USD$11.63 at the end of the trading day. Subsequent pre-market fluctuations saw the stock surge by another 40.67%, bringing it up to USD$16.36.
Meme Stock Phenomenon
The meme stock phenomenon that has become a staple of the stock market over the course of the previous year is largely responsible for the recent surge in WISH stock prices. The surge comes in the site of an absence of recent developments or fundamental changes in the company to warrant such activity. Rather, the company’s stock has become the latest target of a coordinated short squeeze by users of the online social media platform, Reddit. Because of the lack of legitimate bases of the stock price skyrocketing, meme stocks hold significant inherent risk and potential volatility.
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Reddit Targets WISH
Nevertheless, WISH is gaining increasing and rapid traction among the Reddit community, with the company behind the giant e-commerce platform Wish being fortuitously bolstered by the meme stock rally. The massive gains over the past day come despite the company’s struggles since its Initial Public Offering in the latter part of 2020.
Historic Volatility
The first day of trading in December 2020 saw the stock drop 16% below the price point set for its IPO. Since then, the stock price broke past the USD$25 IPO price just once for a period of a few days in January of 2021. That surge was also primarily attributable to the pumping of meme stocks such as GME and AMC.
Fundamental Woes
The volatility and poor performance are deemed to have been merited by those that participate in the fair share of criticism of the company and its management. The company struggles with brand image issues, with many considering the platform an inferior imitation of the e-commerce goliath, Amazon. Business Insider conducted a comparative report on the experience of shopping on both platforms, with the unfortunate conclusion that WISH failed to deliver the same quality of user experience as Amazon did.
Short Interest
With the odds stacked against it, many investing firms expect the company to go under within a few quarters of its IPO. As such, they are betting on its failing, which has resulted in more than 20% of the company’s float being shorts. The Reddit community has picked WISH for these reasons, with a chance to capitalize on significant gains from a short squeeze, as well as challenging Wall Street Investors and disrupting the stock market in general.
Future Outlook for WISH
Armed with a massive rally of the value of its equity, WISH is poised to capitalize on this opportunity to address its fundamentals and differentiate itself from its competition. Current and potential investors are hopeful that management will leverage the resources at their disposal to facilitate significant and sustained increases in shareholder value.
