Wix.com: Path To Profitability Is Now Serious

Sep. 20, 2022 11:57 AM ETWix.com Ltd. (WIX) StockWIX6 Comments

Summary

  • Starboard Value takes a 9% position in Wix.com at approximately $70 per share.
  • Starboard most likely believes that Wix is moving too slowly and Starboard will lean on their previous experience to enact necessary changes, quickly.
  • Wix's Investor Day back pointed to a 20% FCF margin. Given that its current FCF margin at best points to 5% for 2022, there's a lot of room for improvement.
  • Can Wix get its Rule of 40 closer to 30% in 2023? If yes, this would be nearly double the midpoint of 2022.
  • By my estimates, Wix is priced at 20x next year's free cash flows. A very attractive entry point.
  • Looking for a helping hand in the market? Members of Deep Value Returns get exclusive ideas and guidance to navigate any climate. Learn More »

Wix.com sign on one of the Wix buildings at Tel Aviv Port district

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Investment Thesis

Wix.com (NASDAQ:WIX) saw its shares move higher on Monday as investors welcomed Starboard Value, taking a 9% position in the name. Investors are looking to coattail the famous hedge fund, as the fund looks for ways to improve Wix's path

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This article was written by

Michael Wiggins De Oliveira is an inflection investor. This means buying into cheap companies at the moment when their narrative is changing and the business is on a path toward becoming significantly more profitable over the next year.

With a focus on tech and “the Great Energy Transition (including uranium)”, Michael runs a concentrated portfolio with approximately 15 to 20 stocks and an average holding period of 18 months.

Through his 10+ years analyzing countless companies, Michael has accumulated outstanding professional experience in tech and energy and a following of over 40K on Seeking Alpha.

Michael is the leader of the Investing Group Deep Value Returns.

Features of the group include: Insights through his concentrated portfolio of value stocks, timely updates on stock picks, a weekly webinar for live advice, and "hand-holding" as-needed for new and experienced investors alike. Deep Value Returns also has an active, vibrant, and kind community easily accessible via chat.

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Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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.

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