Market Overview

WayFair Falls 15%, Citron Says Q4 Earnings Affirms Belief Company Is Running A 'Terminal Business Model'

WayFair Falls 15%, Citron Says Q4 Earnings Affirms Belief Company Is Running A 'Terminal Business Model'

Wayfair Inc (NYSE: W)'s stock lost more than 14 percent after the company's fourth quarter earnings report solidifies the bear case, according to one notable short seller.

What You Need To Know

Wayfair lost 58 cents per share in the fourth quarter on revenue of $1.439 billion, both of which fell short of the 52-cent loss and $1.36 billion Wall Street analysts were expecting. Net loss during the quarter also worsened from $44 million in the same quarter a year ago to $72.8 million.

On the other hand, active customers rose 33.2 percent from the same quarter a year ago to 11 million and average order value rose from $203 a year ago to $229 in the quarter.

Why It's Important

Left told Benzinga Thursday morning that the earnings report affirms his belief that Wayfair is "running a terminal business model." He added that furniture and home-goods products are "designed for omni channel retailing," as opposed to Wayfair's online-only business model.

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Left, a Wayfair bear since 2015, has seen the short thesis work against him given the stock's more than 100 percent gain over the past year alone. He said in his 2015 report that Wayfair's fair value is under $10. His belief has been consistent over time that Wayfair will be a permanently money losing business.

"[The] company will never make money," Left told Benzinga in response to the company's first quarter earnings report in May 2017. He said the report shows management is "literally just buying revenue."

Wayfair's stock was trading lower by around 14.5 percent at $81.70 ahead of Thursday's market open, which may re-open the bull versus bear debate after the stock's triple-digit percentage gain over the past year.

Related Links:

Citron's Andrew Left: Wayfair 'Should Be Cut In Half'

Cramer: Wayfair Is One Of Wall Street's Most Contested Stocks

Posted-In: Andrew LeftEarnings News Short Sellers Top Stories Exclusives Movers Trading Ideas Best of Benzinga


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