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Shopify And Wix.com - Where Are They Going?

Ramy Taraboulsi, CFA profile picture
Ramy Taraboulsi, CFA


  • Shopify (SHOP) and WiX (WIX) provide very similar services, have similar revenues but trade at vastly different multiples.
  • Shopify historical growth rate is much better than WiX, but its future is clouded with significant risks while Wix's future is much clearer; Both companies have good products.
  • While both companies have strong balance sheets and are running an annual loss, WIX has a much stronger cash flow statement.
  • Strictly e-commerce companies are better suited to use SHOP while companies that do not have e-commerce as their core business are better suited to use WIX.
  • Concurrently longing WIX and shorting SHOP may be a viable approach for investors who want to eliminate the technology and e-commerce market risk from their portfolio.

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I was recently asked by a client to help him choose an on-line e-commerce store front for his business. While doing so, I looked at two alternatives: Shopify (NYSE:SHOP) and WiX (NASDAQ:WIX). This prompted me to look at both companies from both a financial and a product perspective and share my findings.


Following is the stock graph for both companies:

The correlation between both companies is very high and both have experienced a huge return on investment (383% for Shopify and 225% for WiX) in less than 3 years. Both companies operate in the same field (providers of e-commerce and web sites). In addition, both companies have comparable revenue (in the range of $500M each) and comparable number of employees (approximately 2,000 for Shopify and 2,400 for WiX).



Shopify is an e-commerce platform, while WiX is a general web site building platform with e-commerce capabilities. WiX has come a long way over the past 12 months to the extent that it is now competing head-to-head with Shopify in the e-commerce software space, and is now considered the primary Shopify competitor. If this trend continues for the next 12 months, WiX will surpass Shopify from a functionality perspective, and this will result in significantly curtailing the potential growth rate for Shopify.

Shopify and WiX have an overlap in terms of their target market. The following diagram shows how the customer base of both companies overlap:

At a high level, if someone has a few products they

This article was written by

Ramy Taraboulsi, CFA profile picture
Managing Director and CEO, VeritableSoft Innovations Inc. ​Ramy is responsible for all the day-to-day operations of VeritableSoft, in addition to setting up the strategic direction of the company as a board member. ​Prior to working in VeritableSoft, Ramy held different executive positions including Chairman and CEO at SyncBASE, CIO at Insurance Bureau of Canada, VP - Internet Strategy and Development at Fidelity Investments, VP - Internet Strategy at Merill Lynch and Chief Systems Architect at Mercer Human Resources Consulting. Ramy has also held various directorship positions, and he is currently a director of AlphaOmega Reno Construction Inc., Canadian Wado Ryu Karate Do Federation and ESOP Association Canada. In addition to being the Chairman and CEO of VeritableSoft Innovations, Ramy also teaches business at both Seneca College and Schulich School of Business, York University. ​Ramy is a Professional Engineer who holds an M.Sc. in Computer Science, MBA and he is a Chartered Financial Analyst (CFA). Ramy has been practicing different forms of martial arts for 40 years, and is currently actively practicing Karate and Tai Chi. He also plays music and enjoys reading, writing and traveling around the world.

Analyst’s Disclosure: I am/we are long WIX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I am holding both a small long on WIX and a small short on SHOP.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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