Hub’s Wayfair stock soars on earnings news
Shares of online homefurnishings retailer Wayfair shot up yesterday after the company reported better than-earnings, leaving investors who had been betting on poor stock performance out in the cold.
“It was a blowout quarter, they hit all the important metrics,” said Oliver Wintermantel, managing director at Evercore ISI. “It looks like they’re firing on all cylinders.”
Boston-based Wayfair said revenue increased 66 percent year over year to $492 million, and the number of active customers increased 54 percent, crossing the 4 million mark. Shares spiked more than 30 percent at one point yesterday, before ending the day up 28 percent, or $48.95 per share.
Part of the stock surge was due to investors who had bet against the company scrambling to close its short positions and trying to save face, which drove the price up further, Wintermantel said. He said there had been skepticism from some over the company’s ability to get new customers in the crowded online home furnishings space.
Still, the company, which went public last year, did not see a profit last quarter, reporting a net loss of $19.3 million. Wayfair said it spent the money largely on customer acquisition and increasing market share.
“Wayfair continues to invest in the brand, and returns on its marketing investment are materializing into greater customer growth and improved purchase frequency,” said Debra Schwartz, an analyst for Goldman Sachs, in a research note to clients.
Wintermantel said he expects the company to start to turn a profit in 2016 or 2017: “At some point you have to prove you can grow fast, but you can make money.”