Shares of ContextLogic (NASDAQ:WISH) dropped 19.8% on Friday after the e-commerce platform reported disappointing second-quarter results.
ContextLogic’s revenue fell 6% year over year to $656 million. That was far below the $723 million in revenue Wall Street had expected.
The downturn was driven by a 32% plunge in ContextLogic’s core marketplace revenue. The company saw a 13% decrease in app installs and a 15% decline in the average time users spent on its platform as more people returned to stores when the economy reopened.
Worse still, while ContextLogic’s user engagement fell, its advertising costs rose. Management said that Apple‘s recent privacy changes to its iOS mobile operating system led marketers to shift their spending to Android-powered devices. In a letter to shareholders, the company stated:
Ultimately, this drove up competition for advertising bids, restrained our ability to reach more users, and increased advertising costs for Wish since most of our growth marketing has been focused on Android, the preferred device for the majority of our users.
All told, ContextLogic’s net loss ballooned to $111 million from $11 million in the year-ago period.
ContextLogic’s financial results are likely to deteriorate further in the third quarter. The company said its quarter-to-date total revenue through July was down roughly 40% as it pulled back on its digital-ad spending while working to improve its operations.
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