Among the pandemic-era favorites, ContextLogic (NASDAQ:WISH) may be the one that’s seen the biggest reversal of fortune. Over the past year, WISH stock has cratered in price, after its e-commerce platform (Wish.com) experienced a user exodus, declining sales, and very high operating losses.

As you may know, the company has been (or says it has been) at work on a comeback plan. This plan, though, has yet to produce much in the form of positive results. With the exception of slightly-lower losses when it last reported earnings in November, the situation has stayed bad, with little indication of when it’s going to get better.

With this, it’s perfectly understandable why the stock has fallen over 90% over the past twelve months. Far from an overreaction, the market was on the money pushing it down to low single-digit prices.

Still, given its low stock price, and past reputation as a “short squeeze” play, I can see why you may think it’s a “moonshot” play worth buying. However, I wouldn’t immediately jump to that conclusion. While trading at a low price today, it’s far from a bargain. Even worse, if its turnaround plans fail to do the trick? Another heavy round of declines may lie ahead.

The Latest With WISH Stock

In terms of its recent stock market performance, ContextLogic shares have remained on a downwards trajectory. This is due to both the stock market’s recent volatility, plus little in the form of positive news out of the company. Since the start of 2022, it’s dropped from just over $3, to around $2 and changed today.

Yes, there has been one major development with WISH stock since January: the appointment of a new CEO. Back in November, Piotr Szulczewski, its founder and now-former CEO, announced his plans to step down, once a replacement was found. The new captain at the helm, Vijay Talwar, appears to have a solid track record as an e-commerce manager.

But as InvestorPlace’s Brian Paradza argued Feb 2, it’s questionable whether a new CEO (even a talented one) can make a big difference here. The issues with this company may be too much for a simple changing of the guard to correct.

In a few weeks time, we’ll have more information about how the turnaround is going. For all we know, the latest round of numbers could be a pleasant surprise. Yet for now, I would lean toward the assumption that results for the period ending Dec. 31 will be brutal.

ContextLogic and Next Month’s Earnings Release

It may seem like WISH stock has little more room to fall from here. But there’s nothing that says a penny stock (any stock trading for under $5 per share) can’t take a 50%, 75%, or even a 90% haircut. We saw plenty of them do just that, after the excitement surrounding them on several occasions last year.

Now, I’m not saying that ContextLogic is guaranteed to take another big dive. Yet one could happen, depending on what comes out when it reports quarterly results, after the close on Mar 1. According to Yahoo Finance, the sell-side estimates the company will report sales of around $313.5 million for the preceding quarter. That’s a more than 60% drop from the prior year’s quarter.

The average sell side projections for losses come in at around nine cents per share. That’s more or less the level of net losses it reported during the September quarter. Even so, keep in mind it’s very possible results fall short of estimates. Revenue of $313.5 million means just under a 15% decline on a sequential (quarter-over-quarter) basis.

But when the company last reported guidance, it stated sales during October were down 20% on a sequential business. November and December could have seen a similar drop. Although both months fell during the holiday shopping season, this event may have not softened the impact of materially reduced advertising spend.

In short, revenue declines could be worse, losses could widen, and we could see further a drop in confidence in management’s ability to put out the fires, much less turnaround, this burning ship.

The Best Move With WISH Stock

Maintaining its “F” rating in my Portfolio Grader, what could happen to ContextLogic shares if it fails to live up to what are already low expectations? Worst case scenario, it reports cash burn that’s on par with the high cash burn reported for the September quarter.

With this, concern about its dwindling cash reserves could come back into focus. In turn, causing it to take another big dive, as investors brace for a dilutive secondary offering so it can replenish its war chest.

Given that it’s hard to be confident in a turnaround, and the high potential for another big price decline? There’s still little “logic” in buying WISH stock.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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