Another quarterly report, another plunge for shares of ContextLogic Inc., the parent of mobile e-commerce platform Wish, as they sank toward a record low on heavy volume on Friday.

The company, which focuses on affordable products, reported late Thursday a second-quarter loss that widened from a year ago and was wider than Wall Street expected, with revenue falling more than forecast, as demand slowed and costs rose.

While revenue fell 6% from last year, cost of revenue jumped 31%, knocking gross margin down to 58.5% from 70.3%. Read more about Wish’s earnings report.

“We have already begun to significantly cut back our digital advertising spend, and with a focus on maintaining retention of our existing user base in the near term, we believe new buyer conversion will be minimal,” Founder and Chief Executive Piotr Szulczewski wrote in a letter to shareholders.

The stock

plummeted 20.8% in afternoon trading, which would be the biggest one-day loss since the record 29.3% selloff on May 13, the day after first-quarter results.

The stock’s current price of $7.45a share, which was below the June 1 lowest-ever close of $7.74, was nearly 70% below the initial public offering price of $24 a share. The company’s current market capitalization was just $4.6 billion, compared with a market cap of $14.1 billion when the company went public, in December 2020.

Analyst Doug Anmuth of J.P. Morgan double downgraded the stock to underweight, after being at overweight since he started covering it in January. He slashed his price target by 71% to $5, which is about 33% below current levels, from $17.

Anmuth noted that on a macro basis, reopening from COVID-19-related restrictions led to an overall decline in user activity, as evidenced by a 13% quarter-over-quarter decline in global app installations, and a 15% drop in time spent on the platform.

“Wish also faced company-specific issues, as user retention remained pressured amid rising ad costs, which led to Wish changing the user acquisition strategy to focus entirely on retention,” Anmuth wrote in a note to clients.

While Wish has “significant growth potential,” as the company has only reached about 3% of the global target market of more than 1 billion households, Anmuth believes the latest earnings report suggests “more significant damage to the business model, and the new product strategy could take many quarters to materialize and carries considerable execution risk.”

Anmuth wasn’t alone in downgrading Wish after results, as no less than five of the 11 analysts surveyed by FactSet also lowered their ratings. And the average price target is now $11.44, down from $17.10 at the end of July.

Stifel Nicolaus’s Scott Devitt kept his rating at hold, but reduced his price target by 33%, to $8 from $12. In addition to Wish’s new focus away from adding new users, at least until returns from the ad spend improve, in favor of keeping current users, he’s also concerned about the company’s plan surrounding improving the user experience and product selection.

“Improving product quality and merchant depth may shift the company away from its core focus on discounted items and put the platform in direct competition with larger platforms, in our view, although Wish’s social and discovery-based features are still a key differentiator,” Devitt wrote in a note to clients.

Wish’s stock has now plummeted 59.2% year to date, while the Amplify Online Retail exchange-traded fund

has gained 2.2% and the S&P 500 index

has advanced 18.8%.

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