A few weeks back, I broke down the pros and cons of buying ContextLogic (NASDAQ:WISH) as it sits at fire-sale prices. The verdict? Investors were not wrong in sending WISH stock, a one-time meme stock favorite and busted growth story, from as much as $32.85 per share to around $3 per share. Furthermore, I opined there was little to suggest the e-commerce platform operator’s turnaround efforts would pan out and send it back into growth mode.

Still, with its 83% dive in 2021, you may think that things are so bad that it must be all uphill from here for WISH stock. Yet, considering the company’s likely dismal results over the next few quarters, that’s wishful thinking (pun intended).

Even if ContextLogic doesn’t wind up having to raise more cash to keep the lights on, shares could experience another big drop in price over the next 12 months.

Let’s take a closer look at why it’s best to steer clear of WISH stock.

No News is Bad News for WISH Stock

You may be wondering what’s the latest with ContextLogic. Based on the headlines, the answer is, “not much.” No updates on how its turnaround plans are working out. No updates either on who it’s going to hire as CEO after November’s news of founder Piotr Szulczewski jumping ship. There also weren’t any updates on how the company’s platform was performing during the holiday shopping season.

Put simply, no news is bad news for WISH stock. It makes hopes for a successful turnaround seem even more delusional.

As I’ve mentioned before, so far we’ve seen little evidence that this turnaround is actually turning things around. Instead, it appears the company’s efforts, which center on slashing ad spend, are making the situation worse rather than better. In the most recent earnings report, management declined to provide revenue guidance for the fourth quarter but did say sales would drop on a sequential business, even with the holiday shopping season falling within the period.

This points to another quarter of heavy cash burn. As my InvestorPlace colleague Mark Hake noted recently, ContextLogic burnt through $344 million in the third quarter. As the company’s cash dwindles and its “turnaround plan” does little but shrink the business, another big drop may be ahead for WISH stock.

Why Shares Could See Another Plunge in Price

Those who bought WISH stock a year ago have seen their investment decline by more than 80%. For investors who bought in near its 52-week high of $32.85 per share, losses exceed 90%.

Given how far shares have dropped since early 2021, it may seem as if they can’t drop that much more. But if the company can’t get its cash burn under control, it may be forced to raise capital, further diluting shareholder value.

Even if it can avoid the need to raise more capital on dilutive terms, WISH stock could still experience a further decline over the next few months. ContextLogic’s business is shrinking and it has failed to develop a permanent user base for its platform. In short, investors should expect WISH stock to continue falling in tandem with continued declines in its revenue.

The Bottom Line on WISH Stock

Sure, you can’t fully discount the company’s chances of making a comeback. Szulczewski’s replacement could have the skills necessary to fix ContextLogic’s broken business model. But until we know who is taking the helm, there’s no sense getting into WISH stock. What’s more, insiders are dumping shares, signaling they have little confidence in a turnaround as well. 

A takeover of the company by another e-commerce retailer is another potential upside catalyst. A strategic buyer such as one of the Chinese e-commerce companies could make a bid at a big premium to today’s prices.

However, as the Motley Fool’s Leo Sun recently wrote, e-commerce powerhouses Amazon (NASDAQ:AMZN) and Alibaba (NYSE:BABA ) both tried to buy it a few years back. With bids far above its current valuation, no less. Sun adds that given the current state of ContextLogic’s affairs, any potential suitor could be waiting for shares to drop further before snapping up the company.

Betting on WISH stock as a longshot turnaround play or as a takeover target is a huge gamble. And there are plenty of other moonshots out there to roll the dice on.

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