Shares of Wix.com WIX have soared 81.8% in the past year compared with the S&P 500 composite and the sub-industry’s growth of 25.3% and 13.7%, respectively. WIX’s stock price appreciation is driven by strong demand across its Creative Subscriptions and Business Solutions segments. Earnings estimates for 2024 have improved to $6.09 per share from $5.85 over the past 60 days.

One-Year Stock Performance

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Wix Benefits From User Apps, E-Commerce Boom

Headquartered in Tel Aviv, Israel, Wix is a cloud-based web development platform. The company's platform offers solutions that enable businesses, organizations, professionals and individuals to develop customized websites and application platforms and grow their online presence.

Wix benefits from strong e-commerce growth, leveraging its cloud-based platform to meet merchants' evolving needs as social media, cloud tech, mobile devices and data analytics reshape the e-commerce landscape. Per a report from Mordor Intelligence, the global e-commerce market, valued at $10.19 trillion in 2025, is projected to reach $21.22 trillion by 2030 at a 15.8% CAGR. Wix aims to capitalize on this growing market opportunity, which will reflect positively on its top line and share performance. 

Healthy bookings growth, driven by heightened demand for Studio subscriptions, commerce activity and artificial intelligence (AI) solutions, serve as a key catalyst. A major chunk of new partner bookings is coming from Studio accounts as more agencies adopt Studio for their projects. The percentage of registered users using Wix Payments grew every quarter throughout 2021 and continued in the third quarter of 2024. At the end of Sept. 30, 2024, there were 278 million registered users. The company added 189,000 net premium subscriptions in 2023. 

Driven by strong third-quarter results, management raised the 2024 outlook for bookings, revenues and free cash flow. Revenues are now expected to be $1,757-$1,764 million, up from the previous guidance of $1,747-$1,761 million. As bookings and revenues increase, Wix plans to keep costs steady, allowing for significant growth in free cash flow margins. Free cash flow (excluding HQ capital expenditure) is expected in the range of $483-$488 million (27-28% of revenues) for 2024, indicating an increase from earlier guidance of $460-$470 million.

High Costs, Stiff Market Competition Limit WIX’s Prospects

Rising investments in product development, infrastructure and platforms pose challenges. Intense competition in the cloud and AI sectors, coupled with a fluctuating macroeconomic environment, adds further pressure. 

Wix is investing in marketing and partner support, which raises operating expenses. In the third quarter, operating costs grew 2.3% year over year to $276.8 million due to higher selling, marketing and administrative expenses. Non-GAAP costs rose slightly, mainly from planned marketing increases. Most of the extra spending was focused on branding for Studio and customer acquisition. Ongoing cost pressure may limit margin expansion if revenue growth doesn’t keep up the pace.

WIX delivered an earnings surprise of 20.1%, on average, in the trailing four quarters. The company has an average brokerage recommendation (ABR) of 1.52 on a scale of 1 to 5 (Strong Buy to Strong Sell). ABR is the calculated average of actual recommendations made by brokerage firms and portends the future potential of the stock.

Key Picks

Keysight Technologies, Inc. KEYS carries a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the last reported quarter, it delivered an earnings surprise of 5.10%. Keysight is expected to benefit from the growing proliferation of electronic content in vehicles, momentum in space and satellite applications and rising adoption of driver-assistance systems globally.

InterDigital IDCC sports a Zacks Rank #1 at present. In the last reported quarter, it delivered an earnings surprise of 114.47%.

It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company designs and develops a wide range of advanced technology solutions used in digital cellular, wireless 3G, 4G and IEEE 802-related products and networks.

Ubiquiti Inc. UI sports a Zacks Rank #1 at present. In the last reported quarter, Ubiquiti delivered an earnings surprise of 20.9%. Its highly flexible global business model remains apt to adapt to the changing market dynamics to overcome challenges while maximizing growth.

The company’s effective management of its strong global network of more than 100 distributors and master resellers improved its visibility for future demand and inventory management techniques.

 

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