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Publicly traded companies mentioned herein: Amazon.com Inc (AMZN), Liberty Interactive (QVCA), Overstock.com Inc (OSTK), Restoration Hardware Holdings Inc (RH), Rocket Internet SE (RKET GR), Wal-Mart Stores Inc (WMT), Wayfair Inc (W)

Highlights

E-commerce home goods can be a very tough niche of the market to operate in, and shares of Wayfair (W) - the largest online-only furniture retailer in the US - have suffered since mid-2015 as a result of its lackluster performance (as sales have ramped, losses have actually increased and the cash burn has accelerated). The presenter noted that W reported earnings on November 8, 2016 and the stock quickly sold-off from $33 to $29 on the news; however, shares quickly snapped back to the low-$30s primarily due to i) bulls’ admiration of CEO Niraj Shah, ii) the seemingly large TAM opportunity, and iii) the hope that the company will ultimately be acquired. He is short at this time and likes the risk/ reward setup with the stock at present levels (~$32) “or slightly higher” if investors want to wait for a better entry point. In his opinion Wayfair will not ultimately be acquired, as there is no logical buyer. It is more likely that the company will continue to bleed cash as it invests in staying at the top of online search results, building out its warehousing/ logistics capabilities (which runs counter to its “capital light” story), and expanding internationally. If his thesis proves to be accurate the company will need to raise capital via an equity offering in the second half of 2017, and he pegs the fair value of the company as a whole at $1 billion to $1.25 billion (0.2x forward revenue estimates) versus its current market cap of ~$3 billion.