What Happened:

Shares of online home goods retailer Wayfair (NYSE: W) jumped 18.6% in the morning session after the company reported first quarter results that beat analysts' revenue and adjusted EBITDA expectations. Q2 guidance, which was given on the earnings call, was also comforting as it was lin line to slightly above expectations. Specifically, Wayfair expects Q2 revenue to be flat to slightly up year on year compared to Q2 last year, in line with expectations. Adjusted EBITDA margin in Q2 is expected to be in the mid-single digit percentage range, which leaves some room for the company to exceed current expectations. On the other hand, its revenue growth slowed. Overall, this was a solid quarter for Wayfair.

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What is the market telling us:

Wayfair's shares are very volatile and over the last year have had 55 moves greater than 5%. But moves this big are very rare even for Wayfair and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The previous big move we wrote about was 28 days ago, when the company gained 6.1% on the news that Evercore upgraded the stock's rating from Inline (Hold) to Outperform (Buy) and raised the price target from $65 to $80. The new price target represents a potential 20% upside from where shares traded when the upgrade was announced. 

The analyst added, "We see Wayfair as a market share gainer in a cyclically recovering home furnishing market. We believe W's risk/reward is attractive as cost cuts have put a floor under adj. EBITDA, which limits downside and offers attractive upside when revenues start to grow again."

Wayfair is down 0.2% since the beginning of the year, and at $58.63 per share it is trading 30.8% below its 52-week high of $84.67 from August 2023. Investors who bought $1,000 worth of Wayfair's shares 5 years ago would now be looking at an investment worth $386.12.

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