Why Are E-Commerce Company Wayfair Shares Surging Today?
Portfolio Pulse from Lekha Gupta
Wayfair Inc (NYSE:W) shares surged over 15% after announcing a workforce reduction of approximately 1,650 employees, or 13% of its global workforce. The company expects to incur costs of $70 million-$80 million due to the job cuts, primarily for employee severance and benefits, with most costs expected in Q1 2024. The restructuring is projected to save over $280 million annually, contributing to a significant increase in Adjusted EBITDA in 2024. Despite challenges in revenue growth, CEO Shah remains positive about market share gains and anticipates over $600 million in Adjusted EBITDA in 2024 in a flat revenue scenario. Wayfair will release Q4 FY23 results in February 2024. In Q3 FY23, Wayfair reported a 3.7% Y/Y sales increase to $2.94 billion and an adjusted EPS of $(0.13), with over $1.28 billion in cash and equivalents.
January 19, 2024 | 1:17 pm
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Wayfair Inc's stock price surged due to the announcement of significant workforce reductions expected to result in substantial annual cost savings and a positive impact on Adjusted EBITDA in 2024.
The surge in Wayfair's stock price is likely due to investor optimism about the company's cost-cutting measures, which are expected to lead to significant savings and improved profitability. The announcement of expected annualized cost savings and a positive outlook for Adjusted EBITDA in 2024, despite revenue growth challenges, is seen as a strong move to improve financial health and efficiency, which is typically well-received by the market.
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