It’s March going into April 2022, is this a good time to invest in WIX by buying WIX stock right now?
Stock Name and Trading Stock Exchange Platform
Wix.com Ltd. – NASDAQ (NASDAQ: WIX)
The WIX Stock Sector
WIX is an Israel-based software (SaaS) web developer and a leading cloud services platform.
It is located in Tel Aviv, where it was founded in 2006 by the current CEO Avishai Abrahami and fellow developers.
WIX went public in 2013 on the NASDAQ exchange, raising $127M from its IPO.
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WIX also engages in a variety of services and products including;
- Online store services;
- Logo design;
- Web hosting;
- Wix editor;
- Wix music;
- Website building;
- Wix bookings among others.
Recent News on WIX
WIX has seen a huge pullback in the market due to slow growth
It has crashed by more than -75% over the past year, stirring poor sentiments about its stock. WIX is among the stocks with the most day-drops in the past few months, only beaten by $FB.
WIX has experienced a lot of volatility in the last year
The company released its Q4 earnings in February 2022 which fell short of expectations in terms of revenue, which was recorded at $32.83M compared to the estimated $330.3 M.
WIX reported an astonishing loss of $111M in the fourth quarter and an annual loss of $117.2M.
WIX was better by a minuscule on losses per share which was at 37 cents compared to analyst’s 38 cents per share.
WIX has attributed the losses to the covid-19 pandemic and internal issues like R&D, advertising costs among others.
This stunted growth has spurred major exits by WIX investors
On the bright side, WIX has announced a new integration with Amazon’s (NASDAQ: $AMZN) Multi-Channel Fulfillment (MCF).
This will facilitate convenient e-commerce activity from WIX via Amazon.
WIX board of directors has authorized a repurchase program of its shares worth $500M.
WIX investors have responded positively to this news.
Consequently the WIX stock bounced back by a narrow margin
WIX stands with Ukraine during the current crises and has offered to evacuate a multitude of its staff to safety outside the country.
Current Position of $WIX
Although there are quite several gloomy-ridden predictions about WIX by some investors and stock analysts, the company is in a position for potential stock price upside.
WIX is reasonably a large company large with a Market Cap of about $5.45B.
Big asset managers have a majority stake in WIX. The big money trusts in the value proposition of WIX as a long-term player.
The plunge of WIX’s stock price has had its days in the past month, but the underlying factors for WIX are intact.
Institutional Ownership accounts for 90.71% of total outstanding shares is WIX.
The largest shareholders are;
- Rowe Price (14.1%);
- Mangrove capital partners (9.7%);
- Steadfast (8.5%); and;
- Fidelity Investments (5.5%) among many others.
WIX currently has more than 5,900 employees and operates in at least nine countries.
WIX has more than 200 million registered users in more than 190 countries as per the latest statistics.
WIX has been on an upward trend from inception, up until this year.
Revenue growth over the past five years was at an average 25% annual increase.
WIX have spent heavily on advertising over the years, but this is now paying off, despite costing them low returns.
SBC, research and development expenses are suppressing their free cash flow.
WIX is nowhere the size of its chief rivals like Shopify (NYSE: SHOP), but they are focused on becoming better for the end-user.
WIX is cheaper and more suitable for small businesses
WIX was at peak highs during the pandemic due to increased remote working activity. It has since fallen from this position as people return to physical work locations.
WIX closed the week at $95.71 as of 26 March 2022. It is trading at a day range of $93-$99.6. (See WIX stock chart at the end of this article)
It is currently over -70% below its all-time high;
OF all-time-high of $329
WIX is up by +8.99% over the past week and +4.51% over the past month.
The massive downturn witnessed has set the stock back -53.37% in the past six months and -64.59% over the past year.
This has spelled disaster for WIX investors who bought in last year
The volume of shares traded stands at 1.52M at the time of writing. The record lows of the WIX stock over the past year was at $70.70 a share.
The rapid decline witnessed is scaring many WIX investors with overselling further driving down the price.
Value investors see this as short-term hurdle and still hold on to WIX despite the screaming crowds.
WIX shares should rebound, even though they are badly hurt at the moment.
The wide plummet is a good chance to pick up the stock at discount prices.
Sentiment on WIX
The market sentiment on WIX is overly pessimistic at the moment. It somehow seems the expectation was for it to go up perpetually.
Pat Dorsey of Dorsey Asset Management, is a major hoarder of the stock and views the plunge from a different lens.
Dorsey’s firm bought WIX stock way back in 2018 recognizing it is a long-term value asset.
Despite the recent storm, the WIX stock is still up by a solid +40.96% over the past five years, thus the firm is still in the money.
Tech stocks have been down in recent months and WIX is no exception. The rainy days should eventually pass.
Some WIX investors are disheartened as they do not see it as a profitable business.
We are at the top of a market bubble and low prices like this are a blessing in disguise.
WIX is yet to realize substantial profits and has not amassed any gains over the last year. WIX are still investing in their development and growing its market share.
Revenue has been over the years and they increased by 29% year-on-year in 2021 and was recorded a remarkable $1.27B.
WIX Gross profit only grew 11% year-on-year on a GAAP basis. Net profit margin as of December 2021 was at -33.81%, massively plummeting by -736.88%.
Total bookings for the full year 2021 was at $1.419B, up 29% over the year.
The total gross margin on a GAAP basis for the full year 2021 was at 62%. Net income was a dwindling -111M, a disappointing -871.89% year decline.
Operating income for WIX was at -98.18M, down by -75,42%. Capital is being spent on growth at the moment and this explains these poor metrics.
The net change in cash however increased by an unbelievable 1478%, recorded at $164.19M. Cash and equivalents also shot up by 167.30%, registered at $451.36M.
The cost of revenue jumped to $128.70M, an uptick of 23.8.
WIX will likely scale in the coming years and will surely achieve profitability in two-three years.
Future of Wix
WIX is a strong renowned builder in its space. It has enabled millions around the globe to earn income and develop online tools.
Their business model is a plausible one, as they target a low-cost niche, hence attracting more people to their network.
Users have reported increased costs compared to other platforms
They are looking to attain higher gross profit margins in the short-term which will eventually culminate into higher net profit margins.
In WIX’s annual investor conference call, they stated, the current total addressable market is valued at a whopping $185B.
They are looking to tap into this market and believe they are in a good position to do so.
Marketing has been WIX’s major reason for declining growth. The returns from marketing have been really low, but have rapidly increased at least fivefold over the last year.
They have a lot of room for growth as it is still relatively small compared to its competitors.
WIX projects revenue growth to be around $338M to $343M in the coming quarter.
WIX further expects to generate over $15.7B worth of bookings from existing customers over the next decade
WIX is the market leader in self-creators and this is their biggest customer base. They believe phenomenal growth will be experienced in this sector.
The CEO, Avishai Abrahami sees easing barriers in this sector as the solution to growth.
“So, all those things, when we keep removing those things that are the barriers to success, we see growth in self-creators”.
Abrahami added that
“Traditionally, we have been really good at doing that and I think we have a lot of really exciting things coming this year”.
$WIX will likely be around in the future which looks very tech-oriented.
So, all said and done, is this a good time to invest in WIX by buying its stock right now?
WIX is bearish at the current moment due to the many conditions included in this TabStock stock pick article.
This is however not permanent and this company is bullish in the long haul.
Based on moving averages the WIX stock is a neutral play, oscillators, however, suggest a sell and the stock is averagely a sell.
This might seem viable in the technical sense, but it is not so great in the actual sense. Selling at these low prices is an awful move, especially for a long-term holder.
Short positions could be worth it, if and only if properly assessed in the short-term, though highly risky unless using a tight stop loss.
The consensus by analysts is that the WIX stock is a buy, but not a strong buy.
This all distils down to a game of reverse psychology. It is a strong buy due to panic selling and the low WIX stock prices.
As the classic saying goes in the financial markets, be greedy when others are afraid and be afraid when others are greedy.
WIX Stock Price Chart
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