WIX: Deep Dive

It would be interesting to hear Bear’s thoughts.

I’m not sure if WIX has typically low balled guidance in the past.

Wix’s 2018 revenue guidance at the high end, as of:

Dec17: $595m
Mar18: $597m
Jun18: $599m
Sep18: $602m

And of course they’ve achieved $604m. So I wouldn’t suggest anyone expect that the $761m they’ve guided for is a significant sandbag. Note that FCF guide is up 38%, but I think when they deliver that or better, the market will yawn, because an expectation of profitability improvements are baked into the current PE of ~105.

I’ve long said that if Wix’s growth trends down toward 30% in the next couple years, I’d still be happy. But I agree with others here that high-20’s growth already for 2019 (which probably means Q3 and Q4 will be mid or even low 20’s) is fairly disappointing. I still see very little downside here. In fact, I would expect that Wix continues to outpace the market, but I can’t see shares appreciating wildly. I’m thinking maybe we see $150/share in the next couple years, but probably nowhere near $220 (a double).

I like to only invest in things I could see doubling or tripling, so I’ve trimmed my Wix position quite a bit this morning. (Lucky for me, I trimmed yesterday too, since Wix was up 40% YTD!) Will I sell it all? Depends if I can find something else that I’d like to buy or add to. Honestly, right now it’s hard to see anything doubling or tripling in short order, so I’m having a little trouble finding things I want to buy.

Bear

27 Likes