Wayfair’s share price witnessed a dramatic rise and fall in the past two years as the shutting down of economics their subsequent reopening elevated and then clobbered sentiment. In early 2020, the stock was trading above the $100 mark, but the bearish trend pushed it lower, and the downward move was accelerated as Covid-19 started to spread to Europe and the US. The stock bottomed out at $21.74 in March 2020, but that was followed by a phenomenal rally as it cleared $368 in January 2021, but since then it has been moving lower. The online furniture group benefitted on the double from the lockdowns, as not only was there a surge in e-commerce, there was also a drive in the number of people refurbishing their homes – many consumers took the attitude they should spruce-up their homes because there was little else they could spend on as travel and hospitality had constraints imposed on the sectors. Given the switch to working from home, office items were in massive demand.
The fact that Wayfair’s share price peaked in January 2021, while the S&P 500 continued to print record highs until December underlined its underperformance. By January of this year, Wayfair’s share price had dropped below the $200 mark. In early July it fell below $44, its lowest level in two years. Since then, it has recovered a little and seeing as it is off its recent lows, we could be seeing the beginning of a turnaround in the Wayfair share price.
The stock tumbled in May when the group reported a larger than expected loss. The quarterly loss per share was $3.04, which was far greater than the $0.16 loss that equity analysts were expecting. Sales dropped by 14% to $2.99 billion, missing the $3.48 estimate. Active customers are defined as anyone who placed an order in the past 12 months, and that metric fell by more than 23%, implying the group was a short-term hit during the pandemic, but now its popularity is fizzling out. Total orders were 1.87 million, down from 1.98 million in the previous year. Rising costs and delays because of supply chain issues have been a common complaint from companies and that is likely to feature in this week’s update.
Wayfair’s share price has been trading in a range in recent months. While it holds above the $43.26 mark, the bullish move could continue, and it might encounter resistance at $65.68. While a break below $43.26 could see it target $40.00.
Wayfair will report its second quarter results on Thursday 4 August.