Wayfair Retests 52-Week Highs After Strong Q4

Wayfair Inc. (W) shares soared nearly 30% Friday morning after the e-commerce company reported better-than-expected fourth quarter financial results. Revenue rose 39.6% to $2.01 billion, beating consensus estimates by $40 million, and non-GAAP net losses came in at $1.12 per share, beating consensus estimates by $0.16 per share. The company's number of active customers also rose 38% year over year to 15.2 million.

Baird analyst Colin Sebastian noted that Wayfair's first quarter guidance was better than feared, which reflects a high level of confidence in the business. The analyst also said that macroeconomic headwinds have had little impact on Wayfair and that the company's investments have paid off in the form of repeat customer trends. Average orders per customer rose from 1.77 to 1.85 year over year, although average order value fell from $229 to $227.

Despite the optimism among some analysts, there are others that aren't so confident in the online retailer's future. Hedgeye analysts believe that Wayfair stock could see a decline of 50% to 60%. Wedbush analysts were also skeptical that the company's recent investments would justify the cost, despite some early signs of customer loyalty improvements.

From a technical standpoint, Wayfair stock broke out from an ascending triangle pattern and R2 resistance at around $125.00 to retest 52-week highs near $150.00. The relative strength index (RSI) rose to overbought levels with a reading of 81.80, bu the moving average convergence divergence (MACD) continues to see positive momentum. These indicators suggest that the stock could see some near-term consolidation, but the intermediate-term trend remains bullish.

Traders should watch for some consolidation below 52-weeks highs of $150.00 over the coming sessions before a renewed attempt at a breakout. If the stock breaks out from these levels, traders could see a move toward Fibonacci extension levels of $166.52 (23.6%) or $176.74 (38.2%). If the stock consolidates, traders should watch for support near trendline support and R2 resistance at $126.56.

The author holds no position in the stock(s) mentioned except through passively managed index funds.