It's not hard to see why Wall Street is avoiding Wayfair (NYSE: W) stock today. The good news is that Wayfair might continue winning market share in the home furnishings sector so the inevitable industry rebound puts it back on pace to dramatically increase sales over the next decade. Let's take a closer look at whether that bullish outlook makes sense today, or if Wayfair instead is likely to be a drag on investors' portfolios from here.
This time a year ago, Wayfair's (NYSE: W) share price was around $250, but after five consecutive quarters of declining revenue, the stock has sunk to $55 at the time of writing. Investors are also concerned about Wayfair's deteriorating profitability. With the company's finances deteriorating amid a weak backdrop for retail sales, investors are probably wondering if Wayfair can get back on track and whether the stock is worth holding.
Shares of Wayfair (NYSE: W) were pulling back today as the online home-furnishings retailer got swept up in the broad market sell-off in response to a hotter-than-expected August inflation reading. As a struggling growth stock in a consumer discretionary industry, Wayfair is more vulnerable to inflation and the macroeconomic implications of it than most stocks. Year-over-year inflation in August came in at 8.3%, or up 0.1% from July, while core inflation, which excludes food and energy, was up 0.6% from July, or up 6.3% over the last year.