American Invest Hub
  • Politics
  • Investing
  • Business
  • Latest News

American Invest Hub

  • Politics
  • Investing
  • Business
  • Latest News
Investing

Time to buy cheap Wayfair stock as Fed starts cutting rates?

by admin September 21, 2024
September 21, 2024
Time to buy cheap Wayfair stock as Fed starts cutting rates?

Wayfair (W) stock price has remained under pressure in the past few years as concerns about weak consumer spending remain. It was trading at $52.67 on Friday, down by over 41.8% from its highest point in July 2023 and 86% from its all-time high during the pandemic.

Weak consumer spending

Wayfair shares were among the top beneficiaries of the Covid-19 pandemic as more people stayed at home. At the time, surging demand for home furniture and decor pushed its stock to a record high and its market cap to over $35.86 billion.

This trend reversed after the pandemic as demand waned and as inflation jumped to a multi-year high. It also happened as many investors moved from pandemic winners like PayPal, Block, Zoom Video, Moderna, and Novavax. 

As a result, Wayfair has moved from a high-growth company to one that is struggling to achieve single-digit revenue growth. Data shows that its revenue moved from $9.12 billion in 2019 to a peak of $14.1 billlion in 2020.

After that, its revenue dropped to $13.7 billion in 2021 to $12.2 billion and $12 billion in the following two years. Analysts expect that Wayfair’s revenue will slip to $11.8 billion this year and then bounce back to $12.3 billion in 2023.

The company’s key challenge is that consumer spending, especially in the furniture and decor industry has been significantly weak as interest rates have remained high in the past few years. 

With inflation and interest rates high, most people shifted to consumer staples items like food instead of discretionary like furniture. In the last financial results, Niraj Shah, Wayfair’s CEO said:

“Customers remain cautious in their spending on the home, and our credit card data suggests that the category correction now mirrors the magnitude of the peak to trough decline the home furnishing space experienced during the great financial crisis.”

Therefore, there is a likelihood that the company will receive a boost as interest rates start falling and home sales pick up. The challenge, however, is that it will take several rate cuts for rates to move back to where they were before the pandemic.

Wayfair earnings download

The most recent financials showed that Wayfair’s revenue was $3.1 billion, down from $3.17 billion in the same period in 2023. Its half-year revenues dropped from $5.9 billion in 2023 to $5.8 billion.

These results revealed that Wayfair had 22 million customers, a small increase while the number of orders delivered in the second quarter fell to 10 million. The average order value rose to $313 as the company hiked prices because of inflation.

Wayfair is still losing money, which explains why the management decided to lay off 13% of its total workforce earlier this year. Its net loss in the last quarter was $42 million, an improvement from the $46 million it lost in 2023. 

Data by SimilarWeb shows that website to its traffic and applications has dropped recently. Total visits in August stood at 89.5 million, down by almost 6% from the previous month, meaning that the challenges in the industry continued. 

I believe that Wayfair will need to boost its marketing spend to deal with the elevated competition and industry challenges. 

Analysts have mixed opinions about the Wayfair stock. The most recent note was from Argus Research who downgraded the stock from buy to hold. Other analysts from Barclays, JP Morgan, and RBC Capital have an equal-weight, overweight, and sector perform, respectively. The average Wayfair stock price forecast among analysts is $62.87, higher than the current $52.50. 

Wayfair stock price analysis

The weekly chart shows that the Wayfair share price has moved sideways since 2022. It has remained inside the key support level at $29.10 and the resistance level at $91. There are signs that it has struggled to drop below that support point. 

Wayfair is consolidating at the 50-week and 25-week Exponential Moving Averages (EMA). Also, the Average True Range (ATR) has moved upwards, signaling that some investors are slowly accumulating the shares.

Therefore, the stock will likely start to bounce back in the next few months as investors target the next key resistance point at $75, its highest point in May this year. This rebound will likely happen ahead or after its next financial results on November 1.

The post Time to buy cheap Wayfair stock as Fed starts cutting rates? appeared first on Invezz

0
FacebookTwitterGoogle +Pinterest
previous post
RBC downgrades Rapid7 amid rising competition: will RPD stock slide?
next post
Morgan Stanley cuts ASML stock rating to ‘Equal-weight’: is it time to sell?

Related Posts

DAX index analysis ahead of SAP, Deutsche Bank,...

October 17, 2024

Siren Awarded High-Grade Lyell Tenement for a Further...

June 5, 2024

Here’s why Qantas share price has surged to...

December 12, 2024

More High-Grade Gold & Silver Confirmed at Dynasty...

May 15, 2024

Gold price forecast: triangle forms ahead of FOMC...

January 29, 2025

Celsius (CELH) stock divergence points to a comeback

October 10, 2024

Blackrock’s IBIT is a good Bitcoin ETF: Grayscale’s...

January 5, 2025

Resouro Publishes Initial Resource for Tiros Titanium-Rare Earths...

July 20, 2024

Cheap DocuSign stock could surge 125% to $175

December 1, 2024

Jindalee Spin-Out Dynamic Metals Signs $20M JV with...

March 13, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest News

    • Interview: Strategic location gives Brazil Potash cost advantage in domestic fertiliser market, says CEO Matt Simpson

      June 1, 2025
    • Canada’s Q1 GDP expands by 2.2%, driven by exports spike ahead of potential US tariffs

      June 1, 2025
    • President Trump to host farewell for Elon Musk as DOGE leader steps away

      June 1, 2025
    • UK’s digital banks face divergent fortunes: Starling stumbles, Monzo and Revolut soars

      June 1, 2025
    • Trump wants Apple to shift iPhone production from India to the US: here’s what it means

      May 18, 2025

    Categories

    • Business (3,022)
    • Investing (2,459)
    • Latest News (1,994)
    • Politics (1,530)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: americaninvesthub.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 americaninvesthub.com | All Rights Reserved