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The craziness of the Airbnb and DoorDash IPOs scared off at least one company from going public, but ecommerce startup Wish wasn't deterred. Instead, the company priced its share at the high end of its range at $24, raising $1.1 billion for the company in its IPO and bumping its valuation up from $11 billion to $17 billion.
But unlike Airbnb and DoorDash, which saw their shares nearly double as they started trading, Wish lacked the "pop" a lot of companies like to see. Shares for Wish ended up opening lower than its IPO price at $22.75, and continued to fall in trading before closing at $20.05, down over 16% from its pricing — a tech IPO more reminiscent of last year's disappointing Uber IPO than the exuberance of last week's debuts.
"Markets tend to be volatile. We got to a great place," Wish's CFO, Rajat Bahri, told Protocol. "If we're up and down the same day, it doesn't matter. It's a long-term journey and as long as we execute and get to our vision, then the markets will reward us for that."
Part of the challenge is selling investors on Wish's long-term vision and the belief in a shopping platform that's focused on value and not brand-name items. The company counts over 100 million monthly active users, but Bahri said Wish's focus on providing that value to its target audience is one of the most misunderstood things about the company, since its investor base is coming from the top 10% of the country and Wish's market is targeting the bottom 50%.
"Our investors tend to be more brand conscious and more focused on high price value," he said. "So for them to appreciate what the bottom half of the world lives like and what their needs are, that's where we had to do a lot of education in saying how big that market is, how it's been underserved by traditional ecommerce companies and how we are providing such a great experience for these folks who in the absence of our platform will not be able to buy these types of product."
Much of Wish's value proposition is derived from its supply chain, which is concentrated in China. That ended up being an extra challenge during the COVID-19 pandemic when Wish faced a lot of supply issues, even ahead of the pandemic spreading to markets like the U.S. "The air flights were shut down, and all our products come in the underbelly of planes," Bahri said. "We had some supply chain things that were unique to us."
Still, Wish was able to grow at a faster rate in 2020 than it had seen in 2019. Revenue in the first nine months of 2020 reached $1.75 billion, up 32% from $1.33 billion during the same period last year. But revenue in between 2018 and 2019 only grew 10%. Now Wish's challenge is convincing investors that its stock is not something to be discounted, too.
"There is a big market out there, and I feel that the next billion people who will start shopping online will be these value conscious consumers all over the world, whether it's South America, whether it's Africa, whether it's Eastern Europe, and we are perfectly suited for those kinds of value-conscious consumers," Bahri said.
Biz Carson ( @bizcarson) is a San Francisco-based reporter at Protocol, covering Silicon Valley with a focus on startups and venture capital. Previously, she reported for Forbes and was co-editor of Forbes Next Billion-Dollar Startups list. Before that, she worked for Business Insider, Gigaom, and Wired and started her career as a newspaper designer for Gannett.