One of our online retailers is Wayfair. I was looking at their Q4 2017 10K and surprised their price is going down. Couple points:
- Undervalued compared to Amazon (compare market cap to annual sales). Amazon’s market cap is more than 4X revenue. Wayfair is just over 1X revenue. Wayfair has posted losses, but they are investing heavily in a growing business.
- Getting close to top 10 online retailer and in terms of home furnishings I suspect they are actually LARGER than Amazon.
- Year over year, sales went UP (46% in Q4 2017) while COGS and overhead were relatively consistent or decreased
- Stock price DOWN 30% from this year’s high despite strong performance
- Today they are launching Way Day, their answer to Amazon’s Prime Day. One customer has sold more in the last few hours than an average day. Search trends way up.
CONCLUSION: once Way Day performance is announced, stock price will see an immediate rebound. Even then I think it will be a great buy and think they will soon be getting press to push them into top 10 online retailer.