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Investors discount Wish after share price falls in market debut​

"If we're up and down the same day, it doesn't matter," Wish CFO Rajat Bahri said.

Investors discount Wish after share price falls in market debut​

Wish lacked the "pop" a lot of companies like to see.

Photo: Gabby Jones/Getty Images

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.

Big Tech benefits from Biden’s sweeping immigration actions

Tim Cook and Sundar Pichai praised President Biden's immigration actions, which read like a tech industry wishlist.

Newly-inaugurated President Joe Biden signed two immigration-related executive orders on Wednesday.

Photo: Chip Somodevilla/Getty Images

Immediately after being sworn in as president Wednesday, Joe Biden signed two pro-immigration executive orders and delivered an immigration bill to Congress that reads like a tech industry wishlist. The move drew enthusiastic praise from tech leaders, including Apple CEO Tim Cook and Alphabet CEO Sundar Pichai.

President Biden nullified several of former-President Trump's most hawkish immigration policies. His executive orders reversed the so-called "Muslim ban" and instructed the attorney general and the secretary of Homeland Security to preserve the Deferred Action for Childhood Arrivals, or DACA, program, which the Trump administration had sought to end. He also sent an expansive immigration reform bill to Congress that would provide a pathway to citizenship for undocumented individuals and make it easier for foreign U.S. graduates with STEM degrees to stay in the United States, among other provisions.

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Emily Birnbaum

Emily Birnbaum ( @birnbaum_e) is a tech policy reporter with Protocol. Her coverage focuses on the U.S. government's attempts to regulate one of the most powerful industries in the world, with a focus on antitrust, privacy and politics. Previously, she worked as a tech policy reporter with The Hill after spending several months as a breaking news reporter. She is a Bethesda, Maryland native and proud Kenyon College alumna.

People

Poshmark made ecommerce social. Wall Street is on board.

"When we go social, we're not going back," says co-founder Tracy Sun.

Tracy Sun is Poshmark's co-founder and SVP of new markets.

Photo: Poshmark/Ken Jay

Investors were keen to buy into Poshmark's vision for the future of retail — one that is social, online and secondhand. The company's stock price more than doubled within a few minutes of its Nasdaq debut this morning, rising from $42 to $103.

Poshmark is anything but an overnight success. The California-based company, founded in 2011, has steadily attracted a community of 31.7 million active users to its marketplace for secondhand apparel, accessories, footwear, home and beauty products. In 2019, these users spent an average of 27 minutes per day on the platform, placing it in the same realm as some of the most popular social media services. This is likely why Poshmark points out in its S-1 that it isn't just an ecommerce platform, but a "social marketplace." Users can like, comment, share and follow other buyers and sellers on the platform.

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Hirsh Chitkara
Hirsh Chitkara (@ChitkaraHirsh) is a researcher at Protocol, based out of New York City. Before joining Protocol, he worked for Business Insider Intelligence, where he wrote about Big Tech, telecoms, workplace privacy, smart cities, and geopolitics. He also worked on the Strategy & Analytics team at the Cleveland Indians.
People

Affirm CEO Max Levchin: ‘I see an ocean of opportunities’

The fintech startup's stock soared more than 90% in its IPO debut today.

It was a blockbuster debut for Affirm. The fintech startup's shares soared more than 90% when it went public on Wednesday.

The day itself began quietly for CEO Max Levchin: He kicked it off with a Zoom call with his kids, made a latte for his wife and joined a group chat with some high school friends, one of whom is recovering from COVID-19. "We were very happy to hear that he's doing well," he told Protocol shortly after his startup began trading on the Nasdaq Global Exchange.

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Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Signal at (510)731-8429.

Power

Affirm takes 'buy now, pay later' public today. Investors may balk at the risk.

The San Francisco startup's rise highlights the rapid growth of payment and lending platforms, especially among millennials.

Affirm, the "buy now, pay later" startup, is going public on Wednesday in one of the most anticipated IPOs this year.

Affirm's IPO, which could value the company at a reported $10 billion, highlights the rapid growth of ecommerce and related payment and lending platforms amid the pandemic, as well as new ways that consumers, particularly younger ones, seek to make purchases: Many are eschewing credit cards to avoid going into debt.

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Tomio Geron

Tomio Geron ( @tomiogeron) is a San Francisco-based reporter covering fintech. He was previously a reporter and editor at The Wall Street Journal, covering venture capital and startups. Before that, he worked as a staff writer at Forbes, covering social media and venture capital, and also edited the Midas List of top tech investors. He has also worked at newspapers covering crime, courts, health and other topics. He can be reached at tgeron@protocol.com or tgeron@protonmail.com.

Power

The NYSE China flip-flop: A battle between profit and accountability

Western investors want transparency. But what if guaranteeing that closes a door on the U.S. profiting from China's tech success?

The New York Stock Exchange can't decide whether to delist certain Chinese tech apps.

Photo: Julien Chatelain

The New York Stock Exchange's flip-flopping statements this week over the delisting of Chinese tech stocks highlight a longstanding dispute over how much access Chinese corporations should have to U.S. capital markets. It's a debate that some experts say pits profit against accountability, and one that will likely continue under the Biden administration.

The confusion began last week, when the NYSE announced that it would delist the stocks of three Chinese telecom companies — China Telecom, China Mobile and China Unicom — to comply with the Trump administration's order in November barring U.S. companies and individuals from investing in Chinese firms that work with the Chinese military.

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Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Signal at (510)731-8429.

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