Executive Summary:
Wix.com Ltd. is a leading cloud-based website development platform that empowers users to create, manage and grow their online presence. Wix started with a user-friendly drag-and-drop website builder and has evolved into a comprehensive platform offering tools for SEO, marketing, and e-commerce. The company places a strong emphasis on continuous innovation, ensuring its users have the most up-to-date features to succeed online.
Wix.com Ltd. Earnings per share (EPS) to be $1.32, which would be a slight increase over the $1.26 reported in Q2 2023. Revenue is also expected to show growth, with a consensus forecast of $435.18 million.
Here is a deep dive on Wix from a few months ago, as well.
Stock Overview:
| Ticker | $WIX | Price | $157.32 | Market Cap | $8.75B |
| 52 Week High | $178.65 | 52 Week Low | $75.09 | Shares outstanding | 55.65M |
Company background:
Wix.com Ltd. is a Israeli company founded in 2006 by Avishai Abrahami, Nadav Abrahami, and Giora Kaplan. Creating a website for a startup led them to develop a user-friendly platform for anyone to build a web presence.
Today, Wix offers a variety of tools that go beyond website creation. Wix also provides e-commerce solutions for businesses to sell products and services directly through their website. With over 200 million users worldwide, Wix faces competition from other website building platforms like Squarespace, GoDaddy, and Shopify. The company’s headquarters are located in Tel Aviv, Israel, with offices around the world.
Recent Earnings:
Wix.com Ltd. The EPS (earnings per share) is expected to be $1.32, which would be a modest increase over the $1.26 reported. Revenue is also expected to show growth, with a consensus forecast of $435.18 million. This is lower than some analysts’ predictions, reaching as high as $1.21 billion.
Wix has historically shown growth in both its user base and revenue, so maintaining this trend will be crucial. Its strategies for customer acquisition, product development, and navigating the competitive landscape.
The Market, Industry, and Competitors:
Wix.com Ltd. operates in the website building and creation market. This surge is fueled by the growing necessity for businesses and individuals to establish a strong online presence. Analysts predict a Compound Annual Growth Rate (CAGR) of around 10% for the global website builder market.
The increasing number of people using the internet, particularly in developing economies, creates a vast potential user base. Additionally, the growing adoption of smartphones and tablets makes it even more critical for businesses to have mobile-friendly websites. The rise of e-commerce further intensifies the demand for user-friendly website building tools.
Unique differentiation:
- Squarespace: A strong contender known for its user-friendly interface and aesthetically pleasing templates. Squarespace excels at creating beautiful websites for creative professionals like photographers, artists, and designers. While Wix offers e-commerce features, Squarespace plans might be more suitable for those focusing heavily on showcasing a portfolio or visual content.
- Shopify: A leader in the e-commerce website building arena. While Wix offers e-commerce capabilities, Shopify is purpose-built for businesses looking to establish a robust online store. It boasts a wider range of e-commerce features, inventory management tools, and integrations with popular sales channels.
- GoDaddy & HostGator: These domain registrars and web hosting companies have expanded into website building, offering user-friendly tools at competitive prices. They might be a good option for users prioritizing a simple and affordable website creation process.
- WordPress.com: A powerful open-source platform offering a high degree of customization. However, it requires more technical knowledge compared to Wix’s drag-and-drop interface. While Wix offers paid plans with increased features, WordPress.com offers a free plan with limitations, making it an attractive option for budget-conscious users comfortable with a steeper learning curve.
Ease of Use: Wix’s drag-and-drop interface is known for its exceptional user-friendliness. Even users with no coding experience can create professional-looking websites. This focus on simplicity makes Wix a popular choice for beginners and those seeking a hassle-free website creation process.
Scalability: Wix caters to a wide range of users, from individuals building personal websites to businesses looking for robust online stores. Their pricing plans scale accordingly, allowing users to upgrade features as their needs evolve. This scalability makes Wix a platform that can grow with its users’ ambitions.
App Marketplace: Wix offers a vast App Marketplace with additional features and functionalities. Users can integrate tools for marketing automation, social media management, analytics, and more. This extensive app selection allows for a high degree of customization, catering to specific business needs.
Management & Employees:
Avishai Abrahami (CEO): A co-founder of Wix, Abrahami has been with the company since its inception in 2007. He is the driving force behind Wix’s successful growth and scaling of operations.
Reuven Shoval (Head of Product): Shoval brings over 15 years of experience in product management and R&D, ensuring Wix’s product offerings cater to evolving user needs and market trends.
Financials:
Wix.com Ltd. has experienced consistent revenue growth. Compound Annual Growth Rate (CAGR) exceeding 20% for revenue during this period. This impressive growth reflects the increasing demand for user-friendly website building tools.
Wix growth aligns with the revenue expansion and could indicate investments in infrastructure, marketing, and product development.
Technical Analysis:
The stock is in stage 3 consolidation after a strong move up (markup) after last earnings. On the monthly chart it is showing a bullish cup and early stage handle formation. On the weekly chart the consolidation seems to be getting ready for a move higher and the daily chart is showing great support in the $156 range. The RSI and MACD are showing sings of stress however, so we would wait to get a confirmed uptrend before we enter.
Bull Case:
Strong User Base and Conversion Potential: With over 200 million registered users, Wix boasts a massive user base. Bulls are optimistic about Wix’s ability to convert a larger portion of these free users into paying subscribers through its freemium model and by offering valuable features and functionalities. Additionally, upselling existing paying users to higher tiers with more features can further boost revenue.
Undervalued Potential: Some bulls believe Wix’s stock price might not fully reflect its future growth potential. The recent decline from its all-time highs creates a potential buying opportunity for investors who believe in Wix’s long-term prospects.
Bear Case:
Limited Monetization Potential: Bears might be skeptical about Wix’s ability to effectively convert free users into paying subscribers. They might also worry that existing paying users are hesitant to upgrade to higher tiers, limiting Wix’s ability to increase revenue per user.
Macroeconomic Headwinds: A weakening economy or an overall downturn in tech stocks could negatively impact Wix’s share price. Businesses might tighten their budgets and be less likely to invest in website building tools during economic downturns.
Dependence on Freemium Model: Wix’s freemium model, while effective for attracting users, might limit profitability compared to subscription-based models with higher upfront costs. Bears might be concerned about Wix’s ability to generate significant long-term profits if they rely heavily on free users.
