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Wayfair (W) Falls on Widening Net Losses – Despite Higher Revenues

By: , dated November 12th, 2014

Shares of Boston, Massachusetts based Wayfair Inc. (W) fell sharply on Tuesday amid a strong advance in stocks across the board. Wayfair’s stock fell 15.80%, sinking $4.44 per share, to close at $23.66 on volume of 2,331,513 shares. The company reported widening losses against substantially higher revenues for the third quarter, compared to the same period in 2013.

Founded on August 8, 2002, Wayfair, Inc. operates an online home furnishing store. It offers a selection of home furnishings and decor across all styles and price points. The company operates an e-commerce business model, which offers visually inspiring browsing, compelling merchandising and easy product discovery for various products across five distinct brands, including Wayfair.com, Joss & Main, AllModern, DwellStudio and Birch Lane. For 2013, Wayfair had total revenues of $915.84 million, and a net loss of -$40.91 million, although sales growth was 52.4% over the previous year. The company’s stock trades on the NYSE.

The company announced it’s third quarter results earlier in the week, that showed a mixed picture. Despite the sharp increase in total revenues, as well as a strong increase in its customer base, the company’s net loss expanded to -$24.1 for the most recent quarter, verses a loss of just -$3 million for the same quarter a year earlier.

The company launched its IPO on October 2, opening with a price of $36 per share. As Tuesday however, the stock has fallen by more than a third in just a few weeks. Despite the strong increase in total revenues, investors were focusing primarily in the expanding net loss.

On Monday, Wayfair announced it’s third quarter 2014 earnings results. For the quarter ended September 30, the company reported total revenues of $336.2 million, up 41.7% over the $237.3 it reported for the third quarter of 2013. Year-to-date total revenues increased to $910.3 million, compared to $620.5 for the same period in 2013.

However the net loss from operations expanded to -$24.1 million in the third quarter, compared a loss of just -$3 million for the third quarter of 2013. For the nine months ended September 30, the year-to-date loss from operations totaled -$75.5 million, compared to just -$11.4 million for the same period in 2013. Investors reacted to the news by dumping the stock.

Still the company is accentuating the positive. Direct Retail Revenue grew to $285.5 million, a 57.1% increase over the $181.7 million for the third quarter of 2013. In addition, the company reported that the number of active customers in the Direct Retail business reached 2.9 million as of September 30, 2014, up 61.0% year over year.

“Moving forward, we remain highly focused on driving growth by acquiring new customers and increasing repeat purchases from existing customers,” said Niraj Shah, Wayfair CEO, Co-Chairman and Co-Founder. “As in the past, we intend to do this by investing in our brands and the customer experience through improved site experiences, product offering and logistics. Overall, we are excited about our performance in the quarter and the strong continued growth at Wayfair.”

Other News About Wayfair
Wayfair Can Compete With Amazon In Home Products
Wayfair can carve a niche in the home products market.
Wayfair Announces Closing of Initial Public Offering and Full Exercise of Underwriters’ Option to Purchase Additional Shares
Wayfair announced the closing of its previously announced IPO of 12,650,000 shares.

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