Is Social Media Giving Off Hints of ContextLogic’s Fissures?

As America’s expeditionary force, the U.S. Marine Corps operate under the highest of standards. One of its proudest traditions is that Marines never leave their comrades behind. That applies not just to the battlefield but in every aspect of life… except stocks. ContextLogic (NASDAQ:WISH) is not the Marine Corps and sometimes you should leave investments like WISH stock behind.

Now, I know what you’re thinking — not another story about WISH stock. When will this madness end? With God as my witness, the coverage essentially ends when you, the general public, want it to end. I say essentially because I don’t control the media. However, the issue is very logical. Media outlets are businesses and they go where the audience (i.e., the money) is.

Look at it this way. If you go to Japan and order pizza, you’ll come across many strange (to you) ingredients, including fish roe and squid ink. True, restaurateurs can be contrarian and attempt to sell natto — fermented soybean — pizza in Mobile, Alabama. Chances are, it’s not going to go over so well. And so it is with WISH stock.

You (not necessarily you, you, but the general public) want a heaping of cheese and pepperoni. We’re just here to provide double, triple, quadruple, yes even quintuple servings.

The point in bringing this to your attention is that with the proliferation of social media, it’s never been more popular — or easier — for individual retail investors to gin up support for particular equities. Of course, WISH stock commanded a lot of attention about a year ago, with many speculating that it could be the next Amazon (NASDAQ:AMZN).

But as WISH stock tumbled following multiple poor financial readings — for example, the worrying expansion of red ink in retained earnings — many abandoned ship.

Read Between the Lines (or Any Line) for WISH Stock

As is the case with investments featuring heavy meme or meme-ish qualities, the community supporting WISH stock is undeterred. Whether you’re talking about the loss of 22% on a year-to-date basis or nearly 90% over the trailing year basis since the close of the Jan. 20 session, the permabulls continue to post relentlessly.

In many cases where the bullish argument is at least somewhat reasonable, you’ll find tangible data that should make bears think twice about their negative trades. With WISH stock, though, the posts that I’ve seen have largely deflected what critics think about ContextLogic and not about why the bulls support the upside narrative.

For instance, the common deflection is such-and-such publisher talks too much about WISH stock. Or that finance writers have concocted a conspiracy to short ContextLogic. I’ve addressed the former. As for the latter accusation, this is something that former public enemy number one Martin Shkreli did, leading to — from his own social media posts — unscrupulous gains.

Here’s the thing: the Securities and Exchange Commission has wised up to such antics. Further, Shkreli’s in jail, although not for the short-selling behaviors to my knowledge. Either way, few if any would risk such outlandishly immoral and illegal actions.

Therefore, we have a situation where the overwhelming response to WISH stock is to urge caution. On social media, the bulls, while they may be committed to the bitter end, are lacking substantive arguments to bolster the cause. With ContextLogic’s CEO stepping down from the helm and multiple insiders dumping their shares, there’s not much rational hope for WISH.

That’s not to say that no hope exists at all. Like some of the riskiest cryptocurrencies, you can wager on the strength of the underlying community. But that’s speculation on speculation itself.

Do What’s Right for You

When I looked through some of the optimistic posts on social media, I came across another commonly expressed theme: many (though not all) view WISH stock as a moral battle against short traders. This dynamic is worrying because it’s a classic case of how political forces in the U.S. corral citizens into two camps: Republicans and Democrats.

No wants to talk about the puppet masters.

Well, with ContextLogic, if you’re angry about the erosion in value, you should direct your anger to the folks closest to the business, the ones that run the darn show! After all, their torrent of insider sell orders only emboldens both retail and institutional investors to take the opposite (as in “negative”) side of the trade.

Because I guarantee you, the mere fact that I or my colleagues talk about WISH stock (however frequently or infrequently) bears no influence on why ContextLogic executives are dumping their shares. More than likely, they’re desperate to get out which should tell you all you need to know.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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