Wish Stock Tanks Following Q2 Print: Will Bulls Buy The Dip?

ContextLogic Inc WISH printed an abysmal second-quarter earnings report on Thursday. The e-commerce company reported revenue of $656 million, far below the Street estimate of $723 million, and a massive net loss of $111 million compared to $11 million the year prior.

Piotr Szulczewski, the company’s CEO, expressed disappointment in the results and pointed out how user retention had declined despite improved logistics.

Popular fintwit personality Zack Morris, who has spent the past many weeks pumping the stock, posted a picture from his trading account showing he was down over $2 million on his ContextLogic trade. That was prior to the company printing its results, however, and on Friday morning the stock was trading at all-time lows.

Morris took to Twitter to leave a voice recording for his followers. “Hey gang, sorry Wish E.R. wasn’t as good as we wanted it to be but I’m still holding. I still believe this company has a bright future,” Morris began. He went on to apologize and offer advice saying, “Again, I’m sorry guys. You know everyone should be managing their own risk" followed by "we don’t lose ‘till we sell.”

See Also: 'WISH Will Be Over $100 One Day': Mr. Zack Morris

The ContextLogic Chart: In Thursday's after-hours session, ContextLogic plummeted about 18% through a support level at $8.60 but held above its June 7 all-time low of $7.52. In the premarket on Friday ContextLogic fell through the key support level and was trading down almost 30% into the $6.70 range.

Similar to when a security breaks up into blue skies and has no price history to act as resistance, when a stock breaks down into new all-time lows there is no price history to act as support. Traders will want to watch the volume on ContextLogic in the first 15 minutes of trading to see if bulls rush in to buy the dip or whether panic sellers will take their loses and push the stock lower.

ContextLogic’s opening price on Friday will leave a large gap above and because gaps fill 90% of the time it's likely the stock will trade back up toward $9.34 in the future. There is likely to be high volatility in ContextLogic’s stock Friday morning and the initial direction the stock moves in may not indicate the direction for the remainder of the trading day.

If ContextLogic’s relative strength index (RSI) drops to below 30%, it will be in oversold territory which can be a buy signal for technical traders. It should be noted, however, that stocks can stay overbought and oversold for an extended period of time.

ContextLogic is trading below the eight-day and 21-day exponential moving averages (EMAs) with the eight-day EMA trending below the 21-day, both of which are bearish indicators. The stock is also trading below the 50-day simple moving average which indicates longer-term sentiment is bearish.

• Bulls want to see the gap on ContextLogic’s stock filled and for it to regain support at $7.52. If it can regain the level as support, it could trade back up toward the $8.60 level.
• Bears want to see big bearish volume come into ContextLogic to hold it down under the $7.52 level. If the stock is unable to regain the level as support it has some support at its pre-market all-time low of $6.71.

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Photo: Mikhail Nilov from Pexels