Andrew Left Adds To Wayfair Short Position After Q4 Print

Late last year, Citron Research dubbed Wayfair Inc W the anti-Amazon.com, Inc. AMZN and “the real tax avoider.” It initiated a short position on the e-commerce stock, forecasting a plunge: first to $100, then to $40, then to $30.

After Wayfair reported top- and bottom-line fourth-quarter beats Friday, Citron amped its bet.

“Came in short small … adding to position,” Citron’s Andrew Left told Benzinga. “Business is showing no operating leverage whatsoever. The U.S. is a mature market and still not profitable.”

Wayfair shares were nonetheless surging 31.89 percent to $154.68 at the time of publication. 

How Wayfair Performed

Wayfair reported a non-GAAP net loss-per-share of $1.12 with negative free cash flow of $23.2 million.

The quarter closed with cash, cash equivalents and investments totaling $970.3 million.

“Our offering is resonating more and more with our customers in North America and Europe, and we see clear parallels in the progress of our businesses in Canada, the United Kingdom and Germany and the successful course of Wayfair.com in the U.S. at similar stages of development,” CEO Niraj Shah said in a press release. “We continue to expand our proprietary logistics infrastructure and take greater control of our inbound supply chain.’

What Citron Predicted

In its latest report, Citron cited weakness in Wayfair’s fundamentals with “diseconomies of scale.” Customer acquisition costs peaked, and Citron saw no path to profitability as competition proliferated.

At that time, short interest on the stock was at a three-year low. Left is confident it won’t stay that way.

Related Links:

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Amazon's New Scout Business Sends Wayfair's Stock Lower

Photo courtesy of Wayfair.