Wayfair (W) is benefiting from the pandemic, which has added a boost to its already fast sales growth. However, the company's growth in the past has not gotten it any closer to profitability. In fact, its operating margins have actually gotten worse compared to a couple years ago.

Wayfair is targeting 8-10% adjusted EBITDA margins in the long term, but this seems to be a quite optimistic target. There is room for substantial improvement if it reduces growth spending, but I believe that getting to 4-5% adjusted EBITDA margins would be a more realistic long-term target. At that level, I could see Wayfair being worth around $130 per share, but its current share price appears quite inflated.

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