Why Wayfair Stock Lost 16% in February

MarketsMotley Fool

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.

Continue Reading Below

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.

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 WayfairWhen 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.