Few could have anticipated the sharp decline in ContextLogic (NASDAQ:WISH) stock’s value. It went public with an IPO price of $24 in 2020 but has shed more than 77% of its value since then. It recently opened up its books for the third quarter, which shows a massive decline in its monthly active users. Despite its relatively low valuation, WISH stock has no positive near-term catalysts growth drivers to steer it out of the rut it is in currently.

ContextLogic went public late last year, with a whopping valuation of $14 billion.  However, its market capitalization has now tanked below $4 billion. WISH stock has taken a beating in the past year due to a slowdown in the top and bottom-line growth and its dependence on Chinese merchants. With the pandemic-led tailwinds fading away, the company has it incredibly tough to produce results in line with investor expectations. If there isn’t a major turnaround in its business, WISH stock could become uninvestable.

Awful Third Quarter

There’s not much to like about ContextLogic’s third-quarter results. Its discovery-based shopping app Wish continues to disappoint, and the trend is now following in its logistics business.

The company generated just $220 million in the third quarter from its core marketplace business, dropping 52% on a year-over-year basis. The return to normalcy after the unprecedented pandemic has weighed down recent results and will continue to weaken its businesses.  Overall it generated just $368 million in revenues, representing a huge 39% drop from the prior-year period.

Perhaps the most concerning aspect for the company was its logistics sales, which dropped by $80 million sequentially.  The lack of shopper engagement and lower shipping volumes has negatively impacted its logistics business. The only bright spot was the company’s net margins which remained stable from the previous second quarter.

However, the ugliest part for ContextLogic was the disappearance of users from its platform. It had 90 million monthly active users and 52 million active buyers during the second quarter. Its MAUs have dropped to 60 million in the third quarter, while active buyers are 46 million. The trend is worrying, saying the least, and the company is at risk of losing more shoppers in the coming quarters.

Risks

Currently, there are a lot more challenges than opportunities for ContextLogic. The pandemic is drawing to a close, it seems, and online shopping trends have slowed significantly. Moreover, the WISH platform has major profitability troubles, which means it will continue to lose money. On top of that, you have the supply chain crisis, potentially setting it back during the holidays.

The company’s management is taking responsibility for its deplorable performance of late. Consequently, its CEO in Piotr Szulczewski will step down in fiscal 2022 but remain a part of the board of directors. The development could weigh on WISH stock in the short term and build more pressure on ContextLogic to perform.

Currently it seems unlikely that the company could reverse its negative growth trend. Perhaps if there is more emphasis on product quality and improving customer service, it could potentially improve its margins. However, it appears that revenue growth and estimates will continue to dip for the foreseeable future.

Bottomline On WISH Stock

ContextLogic has it incredibly tough to excite new investors after the pandemic fade. Its businesses have slowed considerably of late and are expected to continue to a downward spiral. MAU growth has stalled, and even its logistics segment has disappointed during the third quarter. Hence, there’s not much upside in investing in WISH stock at this stage

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines