Wish, Shopping App for Less Affluent Consumers, Files $1.1B IPO

Wish, a shopping app for less affluent consumers, filed for an initial public offering, seeking to raise as much as $1.1 billion.
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Wish, a shopping app for less affluent consumers, on Monday filed with the Securities and Exchange Commission for an initial public offering, seeking to raise as much as $1.1 billion.

The San Francisco company, founded in 2010 and officially known as ContextLogic Inc., in the filing set an estimated offering price of $22 to $24 a share for an offering of 46 million Class A common shares.

With 584.6 million shares outstanding after the offering, the top of the price range values the company at more than $14 billion.

The shares are expected to trade on the Nasdaq Global Select Market under the ticker symbol  (WISH) - Get Report.

The company says its "vision has been to unlock e-commerce ... by providing consumers access to a vast selection of affordable products and by providing merchants access to hundreds of millions of consumers globally. 

"We have become one of the largest and fastest growing global e-commerce platforms, connecting more than 100 million monthly active users in over 100 countries to over 500,000 merchants offering approximately 150 million items."

ContextLogic said it would use the proceeds of the IPO for working capital, operating expenses, sales and marketing expenses, and capital spending. The company also might use part of the funds "to acquire complementary businesses, products, services or technologies."

The company's founder, chairman and chief executive, Peter Szulczewski, will control about 59.3% of the voting power after the offering, the filing says. 

Before founding ContextLogic, Szulczewski held a number of positions at Alphabet's Google  (GOOGL) - Get Report, including as a technical lead and senior software engineer, from April 2005 until January 2009.

Goldman Sachs, JPMorgan and Bank of America Securities are lead underwriters for the IPO. 

“[In] the emerging economies of Africa, the Middle East, Latin America, and Eastern Europe, where the average household income is approximately $18,000, affordability will be the key element for users shopping online,” the company said in its filing.

“We built Wish to serve these consumers who favor affordability over brand and convenience, and are being underserved by traditional ecommerce platforms,” it added.

For the nine months ended Sept 30, Wish generated a net loss of $176 million and an adjusted loss before interest, taxes depreciation and amortization of $99 million.

The figures compare with a net loss of $5 million and an adjusted lbitda of $11  million in the year-earlier period. 

In 2019, global e-commerce was a $3.4 trillion market and is expected to nearly double to $6.3 trillion by 2024, according to e-marketer data cited by ContextLogic. 

Within e-commerce, mobile is the clear dominant force, accounting for almost two-thirds (63%) of global e-commerce in 2019. That figure is expected to grow to 71% by 2024, the filing says, citing e-marketer. 

Risk factors? Broadly, the company says, "We have historically acquired a significant number of our users through digital advertising on platforms and websites owned by Facebook  (FB) - Get Report and Google, which may terminate their agreements with us anytime. 

"Our investments in sales and marketing may not effectively reach potential users, potential users may decide not to buy through us, or user spend on our platform may not yield the intended return on investment, any of which could negatively affect our financial results."

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