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Wayfair: More Weakness Ahead

Based in part on the negative call by Citron Research, Wayfair (W) is down below $85 now. My previous articles ($$) were negative on the stock due to the similar issues of diseconomies of scale.

Until the online furniture company shows that offering a global delivery network for heavy furniture items can scale profitably, the stock is likely to struggle. Citron has a $40 target on the stock, but something closer to $70 appears the most likely short-term target.

My view is more constructive long term. The retail experience in the furniture market is less than desirable leaving a big opportunity for Wayfair that offers a better service and selection. The question is whether the company can leverage an already large tech department and turn this into a real business.

Disclosure: No position. Please review the disclaimer page for more details. 


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