Wayfair Stock's Fundamentals Are a Red Flag Right Now

The e-commerce stock is down over 75% in 2022

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Wayfair Inc. (NYSE:W) is an American e-commerce company that sells furniture and home goods throughout North America and Europe. Wayfair's brands include Wayfair, Joss & Main, AllModern, Birch Lane, Perigold, and Wayfair Professional.

On June 1, Wayfair announced that its business program, Wayfair Professional, named the winners of their 7th annual Wayfair Professional Tastemaker Awards. The program is meant to recognize excellence and innovation in commercial and residential design.

It's been a rough week for Wayfair stock, with many home good retailers feeling the weight of Target's (TGT) recent profit warning. The 30-day moving average has acted as a ceiling for the entirety of 2022, putting the equity at a steep 71.2% year-to-date deficit. 

w june 9

An unwinding of bullish sentiment among options traders could put additional pressure on the security. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), W sports a 10-day call/put volume ratio of 2.16, which sits higher than 98% of readings from the past year. In other words, calls are being picked up at a much quicker-than-usual clip at the moment. 

Nonetheless, the e-commerce stock continues to offer an elevated level of risk despite its low valuation. Wayfair currently owes $3.94 billion in total debt and hold just $1.99 billion in cash on its balance sheet.

W has been incredibly inconsistent with its top- and bottom-line growth in recent years and will likely end 2022 with significant declines in revenues and earnings. For fiscal 2022, Wayfair is estimated to see a 5.3% decline in revenues and have its earnings drop from $2.32 to -$6.04.

In general, Wayfair stock’s fundamentals present too many uncertainties for the profit potential to be worth the potential losses at this time.


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