Wayfair is slated to report its Q4 earnings in the morning, with a conference call scheduled for 8 AM ET to discuss their results. 

The current street estimates call for EPS of ($0.15), w/ revs +66% y/y to $678.4 mln.

Wayfair guided for Q4 revenues on their previous call, here are the current expectations for Q1 and FY16:

  • For Q1: Estimates call for EPS of ($0.20), w/ revs +47.4% y/y to $625.7 mln
  • For FY16: Estimates call for EPS of ($0.41), w/ revs +41.4% y/y to $3.09 bln

Shares have fared decently since last quarters report despite persistent cautious commentary from short sellers Whitney Tilson and Citron's Andrew Left. Shares dropped as much as 37%, but have seen strength since then and are now down only 13% since the Q3 report in November.

Shares rallied solidly in December after the company's announcement that it saw a 109% increase in overall gross sales, and a 130% increase in Direct Retail gross sales for the five-day peak shopping period of Thanksgiving Day through Cyber Monday.

Highlights from Last Quarter

  • Reported Q3 (Sep) loss of $0.13 per share, excluding non-recurring items, $0.11 better than the Capital IQ Consensus of ($0.24); revenues rose 76.7% year/year to $594 mln vs the $523.35 mln Capital IQ Consensus.
  • Number of active customers in its Direct Retail business reached 4.6 million as of September 30, 2015, up 60.6% year over year
  • Repeat customers placed 1.3 million orders in Q3, an increase of 96.0% year over year
  • Sees Q4 revs of $625-665 mln vs $585.55 mln Capital IQ Consensus Estimate

Options Analysis

  • Based on W options, the current implied volatility stands at ~ 93%, which in 8% higher than the historical volatility (over the past 30 days). Based on the W Weekly Feb26 $40 straddle, the options market is currently pricing in a move of ~19% in either direction by weekly expiration (Friday).

BIAS: BULLISH

RESULTS

Wayfair on conference call says sees Q1 revs $660-700 mln vs $625.70 mln Capital IQ Consensus Estimate  

  • Does not expect positive EBITDA until Q4
  • Q1 guidance: Direct Revenue: $630-665 mln, Other Revenue $30-35 mln
  • Direct Retail growing faster than top end of guidance, but comps lower
  • Cautions of facing more challenging comps compared to 2015

Wayfair beats by $0.08, beats on revs  

  • Reports Q4 (Dec) loss of $0.07 per share, $0.08 better than the Capital IQ Consensus of ($0.15); revenues rose 81.1% year/year to $739.8 mln vs the $678.37 mln Capital IQ Consensus.
  • The number of active customers in our Direct Retail business reached 5.4 million as of December 31, 2015, up 66.6% year over year

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