Alta, Wyoming – J. Carlo Cannell, Managing Member of Cannell Capital LLC, has sent a letter to ContextLogic Inc.’s CEO, Jun Joe Yan, calling for a strategic review and cessation of operations. ContextLogic Inc., the operator of e-commerce website wish.com, has faced significant challenges since going public in late 2020, resulting in a substantial decline in market value.
Cannell Capital LLC’s clients own 3.1% of ContextLogic Inc.’s common stock, prompting Mr. Cannell to address his concerns directly to the company’s CEO. In his letter, Cannell emphasizes the decline in market value, highlighting that $18.2 billion has evaporated between February 1, 2021, and the present. Furthermore, he notes that the company has burned $1.6 billion in cash flow from operations over the past ten quarters, while insiders sold around $234 million. In the most recent quarter alone, ContextLogic Inc. burned $88 million, leading Mr. Cannell and others to believe that this is not a sustainable situation.
Cannell asserts that efforts to remediate the business of WISH, ContextLogic Inc.’s e-commerce platform, are futile, adding that spending any amount of money on this endeavor breaches the company’s fiduciary duty and tarnishes its reputation. Today, WISH trades at a negative enterprise value of $430 million. In Mr. Cannell’s opinion, the best course of action would be for the board to immediately announce and undertake a strategic review process, guided by a credible advisor. This process, according to Cannell, should ultimately result in the cessation of all operations and the return of cash to shareholders, which currently amounts to $22.33 per share, compared to the current stock price of $4.25.
Mr. Cannell expects the board to promptly address his concerns and take the necessary steps in the best interest of all shareholders. He has set a deadline of 5 PM MDT on Wednesday, September 27, for the board to demonstrate action. Failure to do so may result in the formation of a Concerned WISH Shareholder Group, whose purpose would be to hold the board and management accountable. This group would demand access to select sections of board meeting minutes, revealing historical destruction and alleged self-enrichment by management and the board.
The Chairman of the Board, Mr. Tanzeen M. Syed, has also been copied on the letter, underscoring the serious nature of the demands put forth by Cannell Capital LLC.
While there may be some challenges associated with the cessation of operations and related legal and professional expenses, Mr. Cannell believes that shareholders would still greatly benefit from taking swift and sensible action. Time is of the essence, and it is crucial for the board to act promptly to address the concerns raised by Mr. Cannell and others.
