Wish went from a $24 IPO to a $173M fire sale in three years

Wish was a mobile shopping app from ContextLogic, a San Francisco company founded in 2010. It sold ultra-cheap goods, mostly shipped from manufacturers in China, through a gamified app and a flood of advertising on Facebook, Google and Instagram. By the time it went public it reported more than 100 million monthly active users.

The company priced its IPO at $24 a share in December 2020. Its filings showed the engine underneath: revenue had grown to more than $2.5 billion, but it was spending over $1 billion a year on marketing to buy customers, and it was still losing money — more than $300 million in 2020 alone.

The customers the ads bought did not stay. Average order values were tiny, shipping took weeks, quality and refunds were chronic, and the cost of acquiring a customer was never recovered on later purchases. Revenue fell sharply after 2020 as the advertising stopped paying, and the shares collapsed from $24 to well under $1.

In February 2024 ContextLogic agreed to sell substantially all of Wish to the Asian e-commerce group Qoo10 for $173 million in cash — $6.50 a share. ContextLogic kept $2.7 billion of net operating loss carryforwards, the tax record of everything the company had lost.

The decision to buy growth with over $1 billion a year in marketing, never recovered, cost from a $24 IPO to a $173M fire sale.

Growth was bought with advertising, so every sale carried an acquisition cost that had to be earned back on a customer who, the data showed, rarely returned

The product — rock-bottom goods shipped slowly from China — generated tiny order values and chronic refunds, so a customer's lifetime value could not cover the cost of finding them

The business expanded by spending more on ads, not by improving repeat purchase; when the ad spend stopped producing, revenue fell with it

A $24 IPO priced the company as a durable platform; the unit economics described a promotion that had to be re-bought every quarter

Advertising can buy a customer once. If the product does not bring them back, the acquisition cost is paid again on every sale, and the business is a promotion, not a franchise.

Qoo10, a Singapore-based group, bought Wish to add Western shoppers to its marketplace. ContextLogic was left as a shell holding $2.7 billion of tax losses. Wish became, alongside Casper and other direct-to-consumer darlings, the standard example of a business that confused a large advertising budget for a defensible model.