Is a Recovery in the Cards for Wayfair?

By Chris Lange Published Mar 4, 1:30PM EST

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Wayfair Inc. (NYSE: W) reported its fourth-quarter earnings Wednesday before the markets opened. The home furnishing and decor company posted a net loss of $0.18 per share on $408.6 million in revenue, compared to Thomson Reuters consensus estimates for a net loss of $0.28 and $368.80 million in revenue.

The company gave guidance for the first quarter. Wayfair expects total net revenue of $375 million to $390 million, composed of direct retail net revenue of $330 million to $340 million and other revenue of $45 million to $50 million. There is a consensus estimate of $352.51 million in revenue.

Net revenue for the fourth quarter grew by 38.4% year-over-year, mainly driven by direct retail revenue, which increased to $346.7 million, up 55.2% in the same time period. Orders delivered in this period numbered 1.7 million, a 45.1% increase.

Active customers in the direct retail business reached 3.2 million at the end of December 2014, up 53.8% year-over-year. In 2014, roughly 29% of total orders delivered through the direct retail business were placed via a mobile device.

At the end of the fourth quarter, cash and cash equivalents totaled $415.9 million, while free cash flow was $50.8 million.

ALSO READ: Can Lumber Liquidators Save Its Image?

Niraj Shah, co-founder, CEO and co-chairman of Wayfair, said:

We’re very pleased with the fourth quarter and full year results and the company’s continued strong growth. We are particularly excited about the success of our holiday merchandising efforts and our ongoing customer growth. We remain committed to both building the market leading online home brands and to delivering long term value for investors.

Ahead of the earnings, Citigroup downgraded Wayfair to Neutral from Buy and lowered its price target to $26 from $31, on March 2. However, in the previous week Canaccord Genuity reiterated a Buy rating with a price target of $34.

Looking at the chart, the stock has a short history and most of it has been negative — primarily for 2014 — but 2015 is a new year. The only real dip that the share price had in the new year was at the same time the broad market took a dip at the end of January. Otherwise Wayfair has been overwhelmingly positive in 2015, up 27% year-to-date.

Shares of Wayfair were up about 15% at $28.98 in Wednesday’s trading session, following the release of its earnings report. The stock has a consensus analyst price target of $34.60 and a post-IPO trading range of $16.74 to $39.43.

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.