Personal Finance

Why Wayfair Stock Lost 16% in February

^SPX Chart

What happened

Home furnishings e-tailer Wayfair (NYSE: W) trailed the market by a wide margin last month, falling 16% compared to a 4% decrease in the S&P 500, according to data provided by S&P Global Market Intelligence .

^SPX data by YCharts .

The decrease offset big gains in the prior month to leave shareholders still up significantly over the past 52 weeks.

So what

Investors got a look last month at Wayfair's holiday quarter results, and the numbers were almost uniformly positive. Sales growth beat expectations, and its customer base climbed to 11 million from 8.25 million a year ago. Wayfair's average spending per order rose significantly, and the company benefited from a more loyal shopper base, with 62% of orders coming from repeat buyers .

A decorated living room.

Image source: Getty Images.

On the down side, net losses expanded as the company spent freely on priorities like increasing staffing and investing in site and software development.

Now what

Wayfair has two major investment goals that should keep a lid on profits over the coming year. In its home market, it plans to build up its delivery infrastructure so that shipping occurs quicker and more efficiently, including on bulky items like couches, tables, and rugs. Executives also expect to pour cash into expanding in international geographies.

The hope is these investments will help keep sales growth rising at a faster pace than the broader market to extend Wayfair's leading share position in this attractive retailing niche.

10 stocks we like better than Wayfair

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Wayfair wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of March 5, 2018

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Wayfair. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Personal Finance Videos

Black Friday Brings Higher Demand and Scarcer Deals

Nov 26, 2021

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More