If it hadn’t already, it now seems clear that the meme-stock mania investors saw over a year ago is completely over. For investors in ContextLogic (NASDAQ:WISH) and WISH stock at least, the price action of late has told that story.
After hitting a peak of more than $32 per share earlier last year, WISH stock has since declined to $1.65 per share at the time of this writing. Today’s downward move of around 6% is simply the latest in an absolute beatdown of this retail investor favorite.
Investors had previously jumped on ContextLogic as a unique e-commerce company with the ability to potentially compete with some massive behemoths in the space. Indeed, with a valuation of only $1.1 billion now, WISH stock had seemed like a decent gamble. Considering how fast other e-commerce players have run, it makes sense.
However, ContextLogic’s business model is a bit different from other providers. This company connects users with merchants directly, providing for a more seamless purchase process for low-cost items. That said, as inflation has raged on and low-priced items have been repriced higher (alongside surging shipping costs), ContextLogic’s business model isn’t as attractive as it once was.
On top of that, there happens to be yet another bearish company-specific catalyst dragging WISH stock down today. So, let’s dive into what investors are watching with WISH now.
Bearish Analyst Sentiment Driving WISH Stock Lower
Today, analyst Kunal Madhukar at UBS provided a lower price target for WISH stock. While UBS did maintain its neutral rating, it lowered its price target to $2 per share. Previously, the target had stood at $4.
Overall, downgrades are never good for a given stock. Investors of all stripes tend to pay attention to analyst ratings for a reason. These seasoned analysts model out expectations for a given company, providing their take on its prospects over the next year. What’s more, while many do consider analyst reports to be lagging indicators of market sentiment and price action, there is inherent value in what analysts have to say.
Notably, this is the second such downgrade from UBS over the past three months. There are some buy ratings and impressive price targets for ContextLogic. However, on the whole, analysts appear to be taking a bearish view of WISH right now. Accordingly, until this sentiment shifts, the market appears to siding with them.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.