ContextLogic, the parent company of the eCommerce site Wish, had a lackluster first day of trading.

This week’s initial public offering (IPO) for ContextLogic, parent company of discount eCommerce platform Wish, seemed destined to enjoy a huge first-day “pop” on Wall Street.

The stock priced at the top of its expected range, Airbnb and DoorDash had just seen massive first-day post-IPO gains, and many were comparing Wish to Amazon, whose shares have soared more than 100,000 percent since that company went public in 1997. And then ContextLogic opened for trading on Wednesday (Dec. 16) — and sank 16.4 percent.

Far from enjoying a pop, the shares opened at $22.75 — 5.2 percent below ContextLogic’s $24-a-share IPO price — and kept falling. After dropping to as low as $19.48 — 27.9 percent below the IPO price — ContextLogic ended the session at $22.05. It partly rebounded Thursday (Dec. 17) to close at $22.27, but it remains 7 percent below the company’s $24 IPO price.

The Wall Street Journal noted that ContextLogic’s lackluster opening day made it just the 14th of more than 80 companies to go public in America since 1995 to have more than $10 billion valuations but fall on their first trading day.

“Even when there’s a very hot IPO market, that doesn’t mean everything jumps up,” University of Florida finance professor Jay Ritter told WSJ. “It looks like the investors have decided that the valuation got a bit ahead of itself.”

Experts say ContextLogic tanked for a number of reasons. Here are a few of them.

A Lower-Income Demographic

First, there’s some question as to how well the company’s business model will really work.

Wish is in many ways an online version of a dollar store, selling products digitally the way Amazon does, but aiming at a cheaper price point — and presumably a lower socioeconomic customer.

“We focus on delivering as much value for our consumers as possible, and that’s served us well,” Founder and CEO Peter Szulczewski, a former Google engineer, told CNBC. “We believe this is an underserved demographic.”

However, it’s not yet clear how strong that market really is.

Losses Appear To Be Growing

ContextLogic also continues to lose money, and the red ink could be expanding rather than shrinking.

The company’s S-1 filing shows that net losses attributable to common shareholders did fall from $247 million in 2017 to $136 million in 2019. However, losses then rose to $176 million through 2020’s first nine months — way up from just $12 million during the same period last year.

And while ContextLogic’s revenues are growing — a good sign for a young company — they’re not doing so nearly as robustly as one would expect from a hot IPO.