A Forensic Analysis Of Wix.com, A Technology Unicorn With 50-60% Downside Risk

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About: Wix.com Ltd. (WIX), Includes: ADBE, EIGI, GDDY, WEB
by: Ben Axler
This article is exclusive for subscribers.
Ben Axler
Hedge fund manager, long/short equity, tech, large-cap
Summary

WIX's freemium website model becoming more competitive, user acquisition costs exploding with registered users slowing. Its recent DeviantArt acquisition is a warning sign of slower growth ahead.

WIX's gross margins are astronomical, and its capex is minimal. It's a rare unicorn that deserves scrutiny. Our forensic analysis has identified numerous potential warning signs.

Investors haven't carefully scrutinized WIX's share count guidance. We estimate 2.2-3.3m shares to be issued, no surprise given the 3x increase in share price over the LTM period.

A close look into the CFO's background and auditor shows a troubling pattern of association with companies plagued by accounting issues and fraud allegations.

WIX trading near avg. analyst price targets and at 9.5x and 178x 2017E sales and EBITDA. Shares are priced for perfection, insiders are selling, and we see 50-60% long-term downside.

Report Entitled "In The Land Near TROI, A Trojan Unicorn"

Spruce Point Capital Management is pleased to announce it has released the contents of a unique short idea involving WIX.com Ltd. ((NASDAQ:WIX