E -grocery shop from 3000% to 360% up WNW Wunong Net Technology Co Ltd.

Summary

  • Wunong Net Technology Co Ltd (NASDAQ: WNW) growth of 3000% went down to 360%. The online grocery shop seems to be down due to competition from Alibaba and JD.com.
  • Competitors are much stronger than the company however the company is trying to achieve its growth by its various strategies submitted in a report.
  • The stock price should be rising once the earnings report is out and shows a higher revenue like it did in 2019 and in the beginning of 2020.

About WNW

WNW Wunong Net Technology Co Ltd (NASDAQ: WNW) was founded in December 2018 and is a holding company through its subsidiary Wunong Technologies Shenzhen. The company offers online retail of foods products in China. In other words, it’s an e-grocery market. The main sales of the company are organic and green food, intangible cultural food, pollution-free products, and agricultural products. Moreover, the company runs a clean food restaurant and changed its name one year before it goes IPO from Advancement International Limited to what it is known for today.

Stock Price History

The company went public on the 12th of December where it first traded at the price of $7.98 on the Nasdaq exchange where it closed on $12.05. That was 140% above the initial public offering price of $5. I know this didn’t get you so excited since we have seen similar situations on IPO days. However, this is where things went really wild! On Wednesday, one after the IPO, the stock price went to $65.10 which is a rise of more than 400%. Well, if this didn’t excite you then let me tell you that the rally continued on Thursday. The stock reached the highest high price of $160.68 but closed on $122.50 the exact same day. The percentage of that is 88% from the previous closing price.

Not all stories have happy endings though. As of the time of this article, shares are trading at $23! What did you think, the stock won’t correct? In fact, the company’s market capitalization was standing at 2 billion one month ago and today is on 575 million. Investors that jumped and take the dip at $70, $50 (you name it) were trapped!

wunong stock
SOURCE: https://www.wnw108.com/

Risk Factors

Although the company’s revenue did grow in 2019 and during the first six months of 2020 by 22% to $2.99 million Wunong’s net loss rose to $1.3 million from $461,000 last year.

The company is heavily dependent on purchases of food products by customers that are middle-income professionals and is facing strong competition in terms of brand, distribution taste, quality, price and product positioning.

Moreover, the company is highly dependent on third party supplies that they do not have long term contracts with. This kind of business relationship can be easily terminated on short notice, fail to deliver on time and any material change in the economic and political view can result in larger costs for purchasing goods.

Lastly, changes in macroeconomic factors such as an economic recession or transportation can have a direct impact on the company. However, this is usually the case for many companies out there if not most of them.

Growth Strategies

The company aims to achieve growth in the following years by online and offline marketing activities like it is already doing with its sales platform and WeChat which is bringing more customers to the website. The company has achieved getting to the central and local government.

Optimizing pre-ordering services, which is an incredible idea, if you ask me, that allows customers to participate in the growth of food products specifically customized to them. Most importantly, strengthen suppliers’ relationships which can help build steady and loyal delivery. The company said that one of their food suppliers expressed interest in becoming a franchisee for their restaurant.

Competitors

Alibaba (BABA), Vipshop (NYSE: VIPS), Pinduoduo (NASDAQ: PDD), and JD.com (JD)Chinese online grocery businesses are much larger than WNW.

Vipshop a stock that no one talks about since it faces competition from JD and Alibaba. However, this discount product platform has grown 80% over the last 12 months whereas Alibaba 20% and JD 130% at the moment of writing this article. Vipshop’s forward P/E of 16 also looks relatively cheap compared to its potential earnings growth.

Bottom Line

Investors these days seem to be focusing more on growth companies, and not on already established ones. I believe that WNW and Vipshop should both be in investors’ views. Investors always look for a hidden gem so should not focus only on solid- long-term players in the e-commerce market.

Disclaimer – I/we have no position in any stock mentioned. I wrote this article myself, and it expresses my personal opinions. I am not receiving any compensation for it, other than FDGT Academy. I do not have or had in the past any business relationship with any company that is mentioned in the above article.

Natalia C. - Junior Analyst at FDGT Academy

Natalia C. - Junior Analyst at FDGT Academy

I am a stock analyst/investor with prior experience and knowledge to BSc Accounting and Finance. After completing my degree and exposure to the accounting firms I decided that the direction I should choose is towards the Investment world. I completed my masters in Investment Management where it gave me solid fundamentals to build my career on. I have examined a lot of different aspects of investment, from REITS, derivatives, currencies, bonds, equity and hedge funds. I never stopped learning about the market which is why I can analyze and write articles for FDGT community always personally opinionated. My passion are green energy and electric vehicles stocks as a whole. I also had my share of analyzing the work form home stocks that are coming to take over in the upcoming years.