Why Ecommerce Platform ContextLogic Shares Are Rocketing Today

ContextLogic Inc WISH shares are rocketing today after the company planned to sell substantially all of its operating assets and liabilities related to its Wish ecommerce platform for about $173 million.

In particular, the company inked a deal with Qoo10, an ecommerce platform operating localized online marketplaces in Asia, for the divestment. 

The purchase price represents $6.50 per share and around 44% premium to ContextLogic’s closing stock price as of February 9, 2024.

In November 2023, ContextLogic initiated a process to explore a range of strategic alternatives to maximize shareholder value.

Following the deal closure, ContextLogic will have limited operating expenses and a balance sheet that will be debt-free, with net cash proceeds from the asset sale, around $2.7 billion of Net Operating Loss (NOL) carry forwards, and certain retained assets. 

The board intends to use the proceeds from the transaction to help monetize its NOLs and explore the opportunity for a financial sponsor to help the company realize the value of its tax assets. 

Joe Yan, ContextLogic CEO, said, “Integrating the Wish platform into Qoo10 will create a true global cross-border ecommerce platform to support the massive market demand. Upon close, we expect the new Wish platform will have an improved customer experience through increased product assortment and merchant selection. And for our merchants, we will be able to offer fully integrated logistical capabilities to deliver unmatched cost-efficient services with high quality control and transparency.” 

The company expects to complete the transaction in the second quarter of 2024, subject to customary closing conditions.

To protect ContextLogic’s ability to use its substantial NOLs in the future, the board has also unanimously adopted a tax benefits preservation plan. 

The company intends to submit the Plan to a vote of its stockholders at its 2024 annual stockholders meeting, expected in the second quarter of 2024.

Price Action: WISH shares are up 48.4% at $6.67 on the last check Monday.