Key Stats for Wayfair Stock
- Price Change for Wayfair stock: 23%
- Current Share Price as of Oct. 28: $107
- 52-Week High: $108
- $W Stock Price Target: $86
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What Happened?
Wayfair (W) stock surged more than 20% on Tuesday after the online home goods retailer crushed earnings expectations and showed its turnaround is accelerating.
The company posted adjusted earnings of $0.70 per share for the third quarter, easily beating analyst estimates of $0.44 per share.
Revenue came in at $3.12 billion, ahead of the $3.02 billion Wall Street expected. That represents 8.1% year-over-year growth, or 9% excluding the company’s exit from Germany. U.S. revenue jumped 8.6% to $2.7 billion, while international revenue climbed 4.6% to $389 million.
Wayfair generated an adjusted EBITDA margin of 6.7%, the highest level in the company’s history outside of the pandemic boom.
Adjusted EBITDA grew more than 70% year-over-year to $208 million. Free cash flow hit $93 million, an improvement of over $100 million compared to the same quarter last year.
CEO Niraj Shah said the strong results came from “Wayfair-specific factors” rather than a broader recovery in the home goods market.
The company is taking market share through better execution of its core value proposition—price, selection, and speed—plus new initiatives such as its loyalty program, physical retail stores, and technology improvements.
Orders grew 5% year over year in the quarter, and active customers reached 21.2 million at quarter-end.
Wayfair raised fourth-quarter guidance, expecting mid-single-digit revenue growth and adjusted EBITDA margins between 5.5% and 6.5%.
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What the Market Is Telling Us About Wayfair Stock
The 20% jump in Wayfair stock reflects investor excitement that its turnaround strategy is working. After years of struggling post-pandemic, Wayfair is proving it can grow revenue and expand margins simultaneously—a powerful combination.
Contribution margin—which is gross margin minus customer service, merchant fees, and advertising—hit 15.8%, up 150 basis points year-over-year. The improvement came primarily from advertising leverage, with Wayfair spending 10.6% of revenue on ads, down from higher levels in prior quarters.
CFO Kate Gulliver said the company ran several “holdout tests” in the third quarter to measure advertising effectiveness.
These tests helped refine machine learning algorithms that drive ad spending decisions. Some of the ad efficiency gains from these tests were one-time, but Wayfair is also seeing structural improvements from free traffic growth, primarily through its mobile app.
Mobile app revenue grew in double digits year-over-year, and total app installs jumped nearly 40%. Getting customers to download and use the app is a big deal because app users don’t need paid advertising to reach them.
For Wayfair stock, the profitability inflection is what matters most. The company has been investing heavily in technology for the past three years, including a massive replatforming effort that modernized its entire technology stack.
That work is now largely complete, allowing engineering resources to focus on customer-facing features rather than backend infrastructure.
The timing couldn’t be better because Wayfair is aggressively deploying AI and machine learning across its platform.
CTO Fiona Tan outlined how the company is using generative AI to transform the shopping experience. This includes AI-powered product discovery, visual search, personalized recommendations, and an upcoming “Complete the Look” feature that generates entire styled rooms.
Wayfair has AI tools that enrich product catalog data, detect fraud, assist customer service agents, and optimize supplier operations. Every employee now has access to generative AI tools to boost productivity, and these investments are driving better conversion rates and lower costs.
The home goods category remains challenging as existing home sales remain at multi-decade lows, and high mortgage rates are keeping people from moving.
But Wayfair isn’t waiting for a housing market recovery. Management said the category has moved from double-digit declines to roughly flat growth, and Wayfair is taking share within that stabilizing environment.
CEO Shah emphasized that tariff-related purchasing was minimal. There were two brief periods when customers pulled forward purchases—a short-lived spike in large appliances in early spring and a similar bump in vanities late in the third quarter—but neither had a meaningful impact on results. The growth is driven by structural market-share gains, not temporary factors.
Wayfair’s loyalty program, called Wayfair Rewards, is gaining traction. The company also launched Wayfair Verified, an editorial program that helps customers discover curated products.
Wayfair opened its first large store in Illinois last year and plans to open a second location in Yonkers, New York, in early 2027. These initiatives are all adding new growth vectors beyond the core online business.
For Wayfair stock, the net leverage dropped to 2.8 times trailing 12-month adjusted EBITDA, down from over 4 times a year ago. The company used $200 million in cash to repurchase about $101 million of principal on its 2028 convertible notes, effectively reducing dilution and future interest expense. Management said it’s balancing debt reduction with dilution management going forward.
Wayfair expects mid-single-digit revenue growth in Q4 despite a roughly 100 basis point drag from exiting Germany. Adjusted EBITDA margins should land between 5.5% and 6.5%, below the third quarter due to higher seasonal advertising spend, but still strong compared to prior years.
Looking ahead to 2026, management said it plans to grow revenue while expanding EBITDA faster than revenue. That’s the key metric investors want to see—operating leverage as the business scales.
With fixed costs relatively stable and contribution margins improving, incremental revenue should flow through to the bottom line at attractive rates.
The company also highlighted that agentic commerce—where AI assistants help people shop—is an emerging opportunity.
Wayfair is working with platforms such as Google, OpenAI, and Perplexity to ensure its catalog is discoverable and transactable via AI chatbots.
At the same time, it’s building competitive moats on its own platform through proprietary data, personalization, and trust-building programs like Wayfair Verified.
Alternatively, the home goods market is still soft, and a prolonged housing slump could limit growth. Competition from Amazon and traditional retailers continues, and while Wayfair is making progress on profitability, the company is still managing debt and convertible notes that mature in 2027 and 2028.
But for now, Wayfair stock is celebrating a strong quarter that validates the turnaround thesis. The company is taking share in a tough market, expanding margins, and generating positive free cash flow. If management can sustain this momentum while the housing market eventually recovers, there could be significant upside ahead.
The 20% gain today puts Wayfair stock within 2% of its 52-week high. The stock has more than doubled year-to-date, reflecting growing investor confidence that the company’s strategic investments are paying off.
With fourth-quarter guidance solid and 2026 expected to show continued EBITDA leverage, Wayfair is positioning itself as a growth and profitability story rather than just a turnaround play.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
