What Happened?
Shares of online home goods retailer Wayfair (NYSE: W) fell 7.4% in the morning session after markets seemed to have caught "tariff/trade war fever" once again (Nasdaq down 1.9%, S&P 500 down 1.2%) amid broader geopolitical anxiety. The volatility was perhaps also related to uncertainty surrounding the Fed's rate decision to be announced later in the week. The consensus estimate was for the Fed to keep interest rates at the range of 4.25%-4.5%.
This could be a bit of a letdown for the dovish camp, expecting some policy relief to help offset the growing market weakness amid the ongoing trade war, which some analysts considered to be bad for growth and corporate earnings.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Wayfair? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Wayfair’s shares are extremely volatile and have had 48 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 11 months ago when the stock gained 18.6% on the news that the company reported first quarter 2024 vresults that beat analysts' revenue and adjusted EBITDA expectations. Q2 guidance, which was given on the earnings call, was also comforting as it was lin line to slightly above expectations. Specifically, Wayfair expected Q2 revenue to be flat to slightly up year on year compared to Q2 last year, in line with expectations. Adjusted EBITDA margin in Q2 was expected to be in the mid-single digit percentage range, which left some room for the company to exceed current expectations. On the other hand, its revenue growth slowed. Overall, this was a solid quarter for Wayfair.
Wayfair is down 34.3% since the beginning of the year, and at $30.26 per share, it is trading 58.5% below its 52-week high of $72.94 from May 2024. Investors who bought $1,000 worth of Wayfair’s shares 5 years ago would now be looking at an investment worth $1,214.
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