What happened
Easy come, easy go. A day after wish.com website owner ContextLogic (WISH 3.23%) shot 37% higher on positive comments about the company made by someone who is typically a short-seller, the stock is giving back 10% of its gains at 11:22 a.m. Tuesday morning on no company-specific news.
It could just be a case of good ol' profit taking by investors who had lost over 70% of their value from recent highs.
Image source: Getty Images.
So what
Yesterday, famed doomsayer Citron Research served up some bullish commentary on ContextLogic, calling the stock the "most asymmetrical opportunity" the writer could see in the market.
Although Citron's Andrew Left had been almost exclusively a short-seller, following the debacle that was the GameStop (GME -2.40%) gamma squeeze, which saw Left lose 100% of his position in the video game retailer, he announced he was going to stop being so negative and would look for the silver linings in companies. Beginning in 2021, Citron would only tell investors what stocks to buy.
Now what
Big run-ups like the one ContextLogic has enjoyed recently -- it's up 64% year to date -- are often followed by the stocks giving back at least some of their gains, if not a good portion of them.
The wish.com owner still trades at less than $1 per share, as it has since last September, which could cause it to receive a delisting notice from the Nasdaq exchange.
Despite its weak stock price, ContextLogic could bounce back, as Left feels ads by competitor Temu during Sunday's Super Bowl football game could reignite investor interest in the space. With plenty of cash at its disposal, no debt, and a good amount of available liquidity at hand, ContextLogic should be able to continue operating for years to come.
