Finance

Wish reveals $1.7bn sales as it joins rush of tech IPOs

Wish, the ecommerce platform that sells cheap Asian goods to the masses, said it had sales of $1.7bn in the first nine months of 2020, up nearly a third on last year, as it prepares for an initial public offering in New York.

The San Francisco-based digital marketplace, registered by the name ContextLogic, said it had facilitated the sale and shipment of more than 640m items in the 12 months to the end of September.

But its net losses have grown faster than sales, rising to $176m in the first nine months from $5m in the same period last year.

Wish is one of a group of consumer-facing tech companies aiming for a public listing in the US before the end of the year, joining Airbnb, meal delivery service DoorDash and the video game platform Roblox.

The app is aiming for a valuation of between $25bn and $30bn on the public market, according to two people briefed on the process. Some of its bankers had initially pitched the company on a valuation as high as $40bn, one of the people said. It last raised money at a valuation of $11.2bn last year.

Wish, which grew out of a machine learning algorithm developed by its chief executive Peter Szulczewski, a Google alumnus, has become a popular platform for purchasing discounted items from China, targeting low- to middle-income consumers with a personalised feed of products.

The company’s prospectus featured a sampling of items on the site, ranging from $3 beauty products to a $16 tool kit and a $104 video camera. Its mobile app has been the most downloaded global shopping app for the past three years, according to the data provider Sensor Tower.

But it has also faced backlash for the quality and safety of products sold on its site — a concern it flagged in the prospectus.

“In addition, we may be subject to unfavourable publicity that would create a public perception that non-authentic, counterfeit, dangerous, illegal, or defective goods are sold on our platform, or that our policies and practices are insufficient to deter or respond to such conduct,” Wish said.

Wish noted that PayPal temporarily stopped processing payments on the site in 2014 “as a result of concerns related to products listed on our platform”.

It also said the coronavirus pandemic had affected business, disrupting supply chains from China and causing a temporary decline in the number of merchants on the site. On the other hand, the company said it had benefited from customers avoiding physical retail stores during the pandemic.

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Wish warned that economic tensions between the US and China could also have an impact, citing US threats to impose tariffs on $500bn of imports from China. The company said most of its merchants and some of its operations are based in China.

Mr Szulczewski will retain majority voting power over Wish through a dual-class share structure, according to the prospectus. Yuri Milner’s DST Global and the venture capital firm Formation 8 were the largest outside shareholders in the company.

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