With the month of December comes a range of much-awaited IPOs. The e-commerce marketplace Wish announced Monday that it has launched its roadshow for Class A common shares. Wish seeks to raise around $1.1 billion through the IPO which would give the firm a valuation of $14.07 billion, Wish disclosed in a filing. ContextLogic, Wish’s parent company had filed its IPO last month with the SEC.
IPO Shares & Price
The San Francisco based app is offering 46,000,000 shares of Class A common shares. The IPO price is estimated to be from $22 to $24 per share before any underwriting discounts and commissions are deducted. The underwriters would be given a 30-day period to purchase an additional 6,900,000 shares of Class A common shares at the IPO price less the underwriting discounts and commissions.
Voting Power
The shares will trade on the Nasdaq Global Select Market under the symbol, “WISH”. While the offering is made up of Class A shares, Class B shares will have around 82% of voting power post the offering. The CEO of the company will have the authority to hold 59.3% of the voting power.
IPO Underwriters
Goldman Sachs, J.P. Morgan, and BofA will act as the lead underwriters for the offering. Citigroup, Deutsche Bank Securities, UBS Investment Bank, RBC Capital Markets, and Credit Suisse are the book-running managers. Cowen, Oppenheimer, Stifel, William Blair, Academy Securities, Loop Capital Markets, and R. Seelaus are acting as co-manager.
Wish’s Story
Founded in 2010, Wish was brought into existence by former Google engineer, Peter Szulczewski, and Yahoo veteran, Danny Zhang. The online platform targets a lower income group that can’t afford deals on Amazon and the likes. In the SEC filing, Wish revealed that even though there has been a rapid increase in global e-commerce over the years, most online companies have focused on serving the affluent segment.
Offering Affordability
Wish identified a massive audience that was uncatered to with 44% of U.S consumers and 85% of European consumers having a household income of less than $75,000. The company also pointed out that many global markets had an average household income of $18,000. Hence, affordability is the key factor in their purchase.
Wish conducted a survey in 2020 to judge consumer preference for affordability. Surprisingly, more than 75% of the respondents considered price more important than the brand and delivery time. Wish is working to close the gap in the market by serving the price-sensitive segment.
Chinese & U.S. Merchants
The fast-growing platform offers a wide range of discounted products from affordable homeware, apparel to cheap electronics and toys. Wish has a high concentration of merchants in China since they offer good quality at competitive prices. At the same time, the number of local U.S. merchants have increased, going up by as much as 268% in 2019. The wide base of diversified merchants has led Wish to offer a broad variety of goods to customers.
Wish Local
While being an online shopping platform, Wish also launched Wish Local in 2019. Wish Local allows local brick-and-mortar stores to partner with Wish and enables both platforms to leverage each other’s strengths. The company has around 50,000 Wish Local partners in 50 countries. The partners can upload their inventory on Wish for selling. On the other hand, Wish makes use of the stores by using them as pickup locations for online Wish orders, acting as a local warehouse.
A Look At The Finances
Wish has been observing a steady growth in revenues while narrowing its loss. The company reported a compound annual growth rate of 31% since 2017 in revenue in 2019 amounting to $1.9 billion. For the first nine months of 2020, revenue hit $1.7 billion, showing an increase of 32% year over year.
Wish had a net loss of $208 million in 2018 which narrowed to $129 million in 2019. The nine months ended September have seen a net loss of $176 million.
The firm has over 100 million monthly active users in more than 100 countries with over 500,000 merchants. It has a portfolio of more than 150 million items, and it sells over 1.8 million goods per day.
Since the arrival of the coronavirus, online sales have boomed. With the pandemic still at large, consumers could be relying on online shopping for a much longer time, indicating a positive outlook for e-commerce firms. Wish captures a wider market by offering affordable products which could lead to a growth in its value in the future.
I am Sophia william, author of World Stock Market. I have a degree in journalism from the University of Missouri and I have worked as a reporter for several news websites. I have a passion for writing and informing people about the latest news and events happening in the world. I strive to be accurate and unbiased in my reporting, and I hope to provide readers with valuable information that they can use to make informed decisions.
