Wayfair stock price has gone nowhere in the past three years even as the broad market has surged to a record high. It has remained between the support at $27.67 and the resistance point at $90.8 since 2023. Its price is down by almost 90% from its highest level during the pandemic when its business boomed.
Wayfair’s growth has stagnated
Wayfair, a company that sells home furnishings online, has suffered as the industry has experienced a recession. The sector has struggled due to high interest rates in the US and weak consumer spending overall.
These high rates have made more people cautious about discretionary spending. As we reported recently, credit card defaults have jumped sharply in the past few months. Furniture and home furnishings tend to be the most affected by this.
Wayfair has also struggled because of the ongoing home affordability crisis in the United States as prices have jumped. A recent report by Redfin showed that home prices continued rising in December, making them unaffordable to most people.
The most recent results showed that Wayfair’s revenue dropped by 2% in the third quarter to $2.9 billion. Its US revenue dropped by 2.3% to $2.5 billion, while the number of active customers fell by almost 3% to 21.7 million.
Wayfair also delivered fewer orders in the third quarter, a sign that the weak consumer spending is continuing.
Wall Street analysts expect the upcoming financial results to show that the fourth-quarter revenue dropped by 1.64% to $3.06 billion. If these numbers are accurate, they will lead to an annual revenue of $11.78 billion in 2024, a 1.86% drop from 2023.
A crucial data point shows that the company may publish weak financial results: its website traffic. According to SimilarWeb, traffic to the flagship website in December dropped by 5% in December to 98.5 million. While these are good numbers, they are indicators that the company is no longer growing.
Analysts are optimistic that the Wayfair stock price will bounce back soon. The average Wayfair stock forecast is $56, up from the current $48.6. Most analysts, including those from Loop Capital, Deutsche Bank, and RBC Capital have a muted outlook for the stock.
Still, the company faces risks ahead. Competition in the furniture and furnishings industry is growing, which may affect its margins. The management expects that its gross margin will remain pressured as its business slows and promotions continue.
Wayfair stock price analysis
W stock chart | Source: TradingView
The weekly chart shows that the Wayfair share price has remained in a consolidation phase in the past few years. This explains why it is consolidating at the 50-week and 25-week moving averages.
The stock has also formed a symmetrical triangle pattern, which is now nearing the confluence level. The Relative Strength Index (RSI) has moved to 50, which is neutral.
Therefore, this arrangement is a sign that the stock is about to make a big move this year. What is hard to predict is whether it will have a breakout or a breakdown. A strong bullish breakout may see it jump to the next level at $90.8, its highest level in July 2023. On the flip side, a breakdown will push it to $27.67.
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