E-commerce site WISH is now leading the upcoming IPOs on NASDAQ, following the two huge Airbnb and DoorDash IPOs last week.
Wish’s parent company, ContextLogic, issues the shares to investors according to the price at the top end in the range set by the company for the issue, which stands at $ 24 per share, a sign of the large demand for the share on the first day on NASDAQ and hopes to raise NIS 1.1 billion. Expected to exceed $ 14 billion
Wish reports sales of about 1.8 million items a day, as a result of algorithms that customize the feed for low- and middle-class-relevant products. It manages to offer cheap prices and sell at these volumes mainly thanks to the purchase of cheap products from the East, with an emphasis on China.
In the first nine months of 2020, the company posted revenue of more than $ 1.7 billion, but WISH’s net losses significantly increased from $ 5 million last year to $ 176 million.
In the past, the company was valued at about $ 11 billion, and various bankers around the world estimated its value in the range of $ 25 billion to $ 30 billion. But after the flight of Airbnb and DoorDash we may well see the value of WISH also fly up with the opening of trading.
The company’s founder and CEO, Peter Szolczewski, owns more than $ 2.5 billion worth of shares in the company at the planned price in the IPO and plans to maintain control of the company even after the IPO.
Back to the dot.com bubble?
The euphoria in the market reminds investors of the period before the dot.com bubble burst (with the required changes of course), and indicates the willingness of large investors to buy technology companies that are growing rapidly but are still losing. Last week, Airbnb was issued at a value of $ 68 billion and immediately jumped to $ 100 billion, meanwhile managed to lose about 14% of its value. DoorDash jumped to $ 60 billion and meanwhile lost about 16%.
Either way, there are opinions in both directions. The optimists are waving a huge technological revolution, at zero interest rates, with big money looking for investment. The pessimists look at the companies and do not understand how they are priced at profit multipliers of 50, 60, 100 and more. So it is true that there are no prophets, but it is worthwhile and important to learn and internalize what has been in history – history always repeats (without committing to an exact date) (expansion here).
“As a graduate of the 2000 collapse, I can say that the irrationality of the market value in Wall Street issues is very reminiscent of that time,” said Shlomi Cohen, a longtime activist and expert on the American stock market. In an interview with BizPortal, Cohen analyzed the celebration of IPOs on Wall Street: “Dordash gets a third of McDonald’s value, that’s a joke. You think about it and tell yourself what a gap between a company spread all over the world and profitable compared to one that operates only in America and still loses.”
He said, “The crazy multipliers are reminiscent of the dot.com bubble, but I’m not afraid of a landslide. That they will not tell me it is because of the children in Robin Hood. The ETF has a big part in that, and I have no complaints to fund managers. (To the full article).
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