Following the recent release of our well-received Home Furnishings “Black Book,” our Retail team led by Sector Head Brian McGough decided to produce a stand-alone “Black Book” on Wayfair (W) which we presented on Monday.
McGough’s team did so given the increasing controversy surrounding the name. The focus of the deck was primarily upon the following key areas:
- market size by category
- revenue capacity and trajectory
- customer acquisition costs, profitability and churn
- appropriate expectations for gross margins
- operational infrastructure and capital needed to break even,
The most important component of the deck is the sizable difference between how Wayfair is currently being viewed by Retail analysts vs. Internet analysts.
To be clear: our view is that Wayfair’s financial model does not work. The company will likely print negative earnings for the foreseeable future.
(*Please email our institutional sales team if you would like access to our Wayfair Black Book. You can reach them at firstname.lastname@example.org)