This company doesn’t make any money, and revenue growth is slowing. Short interest is high…so it’s time to buy! Check out Wayfair (W). (June 15, 2017)
I want to look at Wayfair ( NYSE:W ) here. This is a company that has furniture, decor, home furnishings, stuff like that on line. They are a retail Internet furniture seller. Kind of a tough business to be in, though these guys seem to be doing okay. Apparently Amazon ( NASDAQ:AMZN ), Wal-Mart ( NYSE:WMT ), some of these others are going to be competing with these guys. That is why Andrew Left of Citron Research believes that this stock is a good short. If I am not mistaken he had a short on back here before they reported earnings. Maybe it was after, since I don’t have money with the guy I really don’t care. But I do know, I saw him interviewed on CNBC, almost as arrogant as the Snapchat CEO, he was saying that this company is way overvalued. The stock is basically going to plummet, and he didn’t have to do anything except play golf, because other companies are going to do his work for him by crushing Wayfair ( NYSE:W ),
That is all well and good, and that may very well be the case. They don’t make any money, they really don’t. Their revenues are decelerating, they are still growing but at a declining rate. I could give you the numbers but I am not really going to. Lets just say that the revenue growth for this last quarter was 30 percent greater than the same quarter the prior year. But if we go back to the middle of 2016 that revenue growth was 60 percent higher than the prior year. So what I am saying is, yes you are still getting increasing growth but it is at a lower rate. And again, they don’t make money. SO, while Mr. Left may ultimately be Mr. Right (sorry, it was there, I couldn’t help it, I had to do it), Mr. Left may ultimately be Mr. Right. Right now, Mr. Right is just Mr. Wrong. The stock is moving higher; a third of the float is short. I believe this is just strictly, this is just absolute short covering. This is a stock that is squeezing shorts, they are buying the stock back and that is pushing it higher.
Here is what my suggestion is: Put this date on your calendar, 8/8/17. Also keep in mind there are like 29 million shares in the float. That is not a big float, that is a pretty small float. There are not that many shares that are for sale, and so with the high short interest the stock is moving up. If this thing continues to move, again, the company is not making money, and maybe Left is going to be right. But I would want to be long this stock. But never buy it here and then hold it over earnings. So hold it for the next month, month and a half, as long as the trend is in tact. But don’t be a true believer, don’t be a Wayfairian. It is a short squeeze on a company that is not making money. The stock is moving up. We LOVE companies that are not making money. But definitely get out of it before they report earnings.