Is Social Media Giving Clues to ContextLogic’s Cracks?
As an American expeditionary force, the US Marine Corps operates to the highest standards. One of its proudest traditions is that Marines never leave their comrades behind. This applies not only to the battlefield, but to all aspects of life…except actions. ContextLogic (NASDAQ:TO WISH) is not the Marine Corps and sometimes you should leave investments like WISH stocks behind.
Now I know what you’re thinking – not another WISH stock story. When will this madness end? With God as your witness, the coverage essentially ends when you, the general public, want it to end. I say basically because I don’t control the media. However, the question is very logical. The media are businesses and they go where the audience is (ie the money).
Look at it this way. If you go to Japan and order pizza, you’ll come across a lot of weird (for you) ingredients, including fish roe and squid ink. Sure, restaurant owners can go against the grain and try to sell natto pizza — fermented soy — in Mobile, Alabama. Chances are it won’t go so well. And the same goes with WISH stock.
You (not necessarily you, you, but the general public) want a whole lot of cheese and pepperoni. We’re just here to provide double, triple, quadruple, even quintuple servings.
Bringing this to your attention is that with the proliferation of social media, it has never been more popular – or easier – for retail investors to build support for particular stocks. Of course, the WISH stock got a lot of attention about a year ago, with many speculating that it could be next. Amazon (NASDAQ:AMZN).
But as WISH shares tumbled on multiple bad financial readings — for example, the worrying red ink expansion in retained earnings — many ships gave up.
Read between the lines (or any line) for WISH Stock
As is the case with investments with heavy meme or meme qualities, the community that backs WISH stocks is undeterred. Whether you’re talking about losing 22% on an annual basis or nearly 90% over the year since the January 20 session closed, the permabulls continue to show up unabated.
In many cases where the bullish argument is at least somewhat reasonable, you will find hard data that should make bears think twice about their negative trades. With WISH stock, however, the posts I’ve seen have largely deviated from what critics think of ContextLogic and not why the bulls are backing the bullish narrative.
For example, the common deviation is that this or that editor talks too much about WISH stock. Or that financial writers concocted a plot to shorten ContextLogic. I tackled the first. As for that last accusation, it’s something former public enemy number one Martin Shkreli did, leading – from his own social media posts – to unscrupulous payoffs.
Here’s the thing: the Securities and Exchange Commission has taken notice of these antics. Also, Shkreli is in jail, but not for short selling behavior that I know of. However, few would risk such illegal and immoral actions.
Therefore, we have a situation where the overwhelming response to WISH stock is to urge caution. On social networks, the bulls, if they are committed to the end, lack substantive arguments to support the cause. With ContextLogic’s CEO leaving the helm and several insiders giving up their shares, there isn’t much rational hope for WISH.
That doesn’t mean there is no hope. Like some of the riskiest cryptocurrencies, you can bet on the strength of the underlying community. But it is speculation on speculation itself.
Do what’s right for you
When I was browsing through some of the bullish posts on social media, I came across another commonly voiced theme: many (but not all) view WISH stocks as a moral battle against short traders. This dynamic is worrisome because it is a classic case of how political forces in the United States divide citizens into two camps: Republicans and Democrats.
No means the puppeteers.
Well, with ContextLogic, if you’re angry about the erosion of value, you need to direct your anger at the people closest to the business—the ones running the damn show! After all, their torrent of insider sell orders only encourages retail and institutional investors to take the opposite (as “negative”) side of the trade.
Because I guarantee you, the mere fact that I or my colleagues talk about WISH stocks (even frequently or infrequently) has no bearing on why ContextLogic executives drop their stocks. More than likely, they’re desperate to get out, which should tell you everything you need to know.
As of the date of publication, Josh Enomoto had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto helped negotiate major contracts with Fortune Global 500 companies. Over the past several years, he has provided critical and unique insights to investment markets, as well as various other industries including law, construction management and healthcare.