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Shares of online furniture retailer Wayfair plunged as much as 12% Thursday after the company reported a double-digit gain in first-quarter revenue, but losses widened amid high costs.
Wayfair's revenue rose 39% to $1.94 billion in the first quarter of the year, compared with the $1.92 billion expected by analysts, according to Refinitiv.
Wayfair's loss widened to $200.4 million, or $2.20 a share, from $107.8 million, or $1.22 a share, during the same period a year earlier. On a pro forma basis, it lost $1.62 a share, but that was steeper than the $1.60 a share loss analysts were expecting.
The company also said it had 16.4 million active customers in the first quarter, 39% greater than the same period last year.
Although its number of repeat customers rose from a year ago and the average order value crept up to $237 in the first quarter, expenses are still weighing on the company's bottom line. Wayfair said it is investing in its logistics infrastructure and new product offerings.
The company is also spending a lot to acquire new customers, according to Daniel McCarthy, an assistant professor of marketing at Emory University. He has been warning about this trend for some time. In the first quarter, customer acquisition costs were $88 per customer.
The Boston-based company's stock has become notorious for attracting short sellers within the online retail sector. Skeptics have highlighted that while the company has been able to master the art of selling furniture online, it has yet to do so profitably. And Thursday's report did little to quell investor concerns.
Despite Thursday's vast sell-off, Wayfair's stock, which is valued at $13.3 billion, has climbed 61% this year. In the past 12 months, the stock has surged more than 95%.