Wayfair Inc. (W) Accused of Failing to Disclose Diminished Demand for Its Products

According to the complaint against the company for alleged violations of the Securities Exchange Act of 1934 between August 2, 2018 and October 31, 2018, in a scheme to defraud investors, Wayfair Inc. (W) represented that the company's market share was growing and that it had an increasing base of repeat customers. To the contrary, Wayfair had been experiencing significantly diminished demand for its online product offerings and had substantially increased advertising spending to grow sales. On November 1, 2018, Wayfair reported a massive $151.7 million net loss for the quarter under Generally Accepted Accounting Principles – nearly two times greater than its net loss for 3Q17 – meaning its U.S. business was not profitable in 3Q18. Wayfair also disclosed that its U.S. business would post a loss in 4Q18. On this news, Wayfair declined more than 13%, closing at $96.16 per share on November 1, 2018, and continues to decline.

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