What Happened:

Shares of online home goods retailer Wayfair (NYSE: W) jumped 10.4% in the morning session after the company reported fourth-quarter results that narrowly beat analysts' expectations for revenue, while EPS and adjusted EBITDA beat by a more convincing margin. The company is becoming more cash generative, as its free cash flow of $62 million beat analysts' estimates. The results were achieved amidst "a difficult macro environment." Overall, this was a decent quarter for Wayfair. After the initial pop the shares cooled down to $50.88, up 4.4% from previous close.

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What is the market telling us:

Wayfair's shares are very volatile and over the last year have had 54 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 biggest move we wrote about over the last year was 10 months ago, when the stock gained 18.1% on the news that the company reported first-quarter results that exceeded analysts' revenue and earnings per share (EPS) expectations. Active customers also came in above estimates. The company nearly broke even on adjusted EBITDA, with management expecting to have positive Adjusted EBITDA in the second quarter. Improving profitability is a welcome dynamic for the stock. Overall , it was a strong quarter.

Wayfair is down 13.5% since the beginning of the year, and at $50.88 per share it is trading 39.9% 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 $339.25.

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