“What a difference a year makes” is the best way  to describe the situation of ContextLogic (NASDAQ:WISH). A year ago, WISH stock was marking its debut on the Nasdaq Exchange, via an IPO that priced it at $24 per share.

Today the shares of the e-commerce company which operates the Wish.com platform trade for around $3.10 per share, a drop of well over 80%.

What drove the dramatic retreat of its stock price? Lay the blame on the many times that the story behind this stock changed in 2021. At first, the market considered WISH stock to be a hot growth story, thanks to ContextLogic ‘s high level of growth during the coronavirus pandemic.

But starting in February, the shares started to slide. The stock’s downturn sped up during the spring, as the company began to admit that its growth was decelerating due to the recovery from the pandemic.

By late spring and early summer, the market’s view of the stock shifted from growth play to short-squeeze play. Reddit traders piled in, hoping WISH stock would become the next AMC Entertainment (NYSE:AMC) or GameStop (NYSE:GME). However, ContextLogic ceased to be seen as an aspiring meme stock because in August, it released very bad results featuring revenue declines. As a result, many speculators sold the stock.

Around this time is when the view of ContextLogic morphed into what it is today: a turnaround play. Yet since then, the market’s confidence in this outcome has dropped, pushing the shares well below $5. Now in the bargain basement, ContextLogic’s performance appears more likely to deteriorate than improve.

WISH Stock May Be a High Risk/High Return Turnaround Play

With ContextLogic and its turnaround efforts, there’s good news and bad news. The good news is that the company has a game plan that it’s currently implementing. The bad news is that it may take more than just a few quarters for the company to materially improve its results.

So what’s the company’s plan? As I discussed in my Oct. 14 article on WISH stock, the  game plan entails improving the quality of the products sold on its site, as well as lowering its heavy ad spending. During the pandemic, ContextLogic was able to sell cheap, low-quality merchandise, using heavy ad spending.

Today it needs to step up its game in order to cultivate a steady base of customers. Otherwise it will remain stuck spending heavily to attract one-time buyers. In such a scenario, it probably won’t become profitable.

Again, even if its strategy works, it won’t improve the company’s financial results for some time. So for the next few quarters, expect the company’s results to,  like its most recent earnings report. feature lower losses, due to lower spending on ads, and lower revenue.

There’s little in the form of hard evidence yet to suggest that this change in strategy will cause ContextLogic to be viewed as a growth name again. Even less likely is that the new approach will improve its profitability.

The Bears’ View

Most pundits have been skeptical towards WISH stock lately. For example, another InvestorPlace columnist, Ian Bezek ,predicted in his Dec. 1 article that the company’s sales declines could accelerate sharply.

Based on ContextLogic’s latest guidance, its 2022 sales could be as low as $1.2 billion, far below analysts’ average estimate of $1.8 billion and well below the $2.5 billion in sales it reported in 2020, Bezek noted.  Meanwhile. its former CEO, Piotr Szulczewski, left the company.  Given these points, Bezek found it hard to believe in the company’s comeback .

That’s not all. As a Motley Fool commentator recently opined, there are many other red flags that make it difficult to be optimistic about ContextLogic’s outlook. Heavy insider selling is one of the other red flags and could be a sign of the level of confidence that the company’s C-suite has in it.

Another, smaller red flag is France’s decision to ban the platform due to compliance issues. That could pave the way for other European countries to ban it as well.

The Bottom Line

If ContextLogic can survive the side effects of its turnaround plan, within a year, its sales and monthly active user (MAU) numbers may start steadily improving. Consequently  the stock could rebound sharply.

It may not approach its all-time highs. But even a move back to $10 per share would produce major profits  for the contrarians buying it today. Then again, the odds of this scenario playing out appear to be slim.

Given the stock’s red flags,  the turnaround is not likely to happen. As a result,  it may be best to stay in the skeptical camp and avoid buying WISH stock.

On the date of publication, Thomas Niel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Thomas Niel, a contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.