Accelerating Digital Access And E-commerce Will Ignite Online Creation

Key Takeaways

• AI-driven innovation and platform expansion position Wix for exceptional user growth, higher conversion rates, and outsized revenue opportunities compared to market expectations.
  
• Strategic investment in automation and new segments sets Wix up for improved user retention, operational leverage, and sustained margin and cash flow outperformance.
  
• Intensifying competition, technological shifts, and changing business needs threaten Wix's core business model, challenging its pricing power, market share, and long-term profitability.

Catalysts

Operates a cloud-based web development platform for registered users and creators worldwide.

• While analysts broadly agree that AI-driven product innovation will accelerate user growth and engagement, this likely understates the true potential: Wix's first-mover advantage in AI search visibility and generative engine optimization, combined with proprietary onboarding funnels, positions the company to gain an outsized share as online creation explodes, dramatically accelerating new user acquisition, higher conversion rates, and pushing top line revenue growth beyond current consensus expectations.
  
• Analyst consensus sees fast growth in the Partners and Studio segments, but the current new user cohort momentum-with bookings growth exceeding 20 percent year-over-year and layering effects from increasingly high-value users-points to structural shifts in user quality and long-term retention, suggesting Wix could realize significantly higher customer lifetime value, stickier subscriptions, and ultimately, sustained outperformance in both revenue and net margin expansion.
  
• The rapid integration and scaling of Base44 signals that Wix is not just expanding its total addressable market, but fundamentally redefining the low-code/no-code and app development landscape; by tapping into vibe coding and non-technical as well as professional developer segments, Wix is on track to unlock entirely new, exponential revenue streams from audiences previously unreachable for website builders.
  
• The ongoing global shift of commerce and small business activity online, especially as internet access expands in emerging markets, sets Wix up to capture explosive demand from new SMBs and entrepreneurs entering the digital economy, materially expanding its user base and driving a multi-year, compounding revenue growth tailwind that is still underappreciated by the market.
  
• With deep investments in AI-powered automation, granular user segmentation, and a broadened platform ecosystem-including advanced productivity, payment, and marketing tools-Wix is poised to deliver increasing operational leverage, which alongside falling AI costs, could result in margin expansion and strong free cash flow growth, allowing for even more aggressive capital return and future EPS upside than consensus currently anticipates.

Wix.com Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Wix.com compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Wix.com's revenue will grow by 14.9% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 8.9% today to 18.9% in 3 years time.
• The bullish analysts expect earnings to reach $535.5 million (and earnings per share of $8.73) by about August 2028, up from $166.3 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 38.0x on those 2028 earnings, down from 40.5x today. This future PE is greater than the current PE for the US IT industry at 31.4x.
• Analysts expect the number of shares outstanding to grow by 0.98% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 11.84%, as per the Simply Wall St company report.

Wix.com Future Earnings Per Share Growth

Risks

• The rapid rise in AI-powered web development tools and "vibe coding" platforms is reducing the differentiation of Wix's core website builder, increasing competition and likely putting downward pressure on future revenue growth and user monetization.
  
• The accelerating adoption of integrated ecosystems by large tech companies such as Google, Meta, and Amazon is leading to market consolidation, which may result in more small businesses and professionals opting for all-in-one solutions over standalone platforms like Wix, potentially shrinking Wix's addressable market and impacting long-term revenue.
  
• Free or low-cost open-source and SaaS alternatives continue to proliferate, threatening Wix's ability to sustain premium pricing and undermining long-term margins and earnings as competition for users intensifies.
  
• The growing trend towards businesses relying primarily on social media and app-based presences-coupled with declining organic website search traffic-may reduce the perceived need for traditional websites, posing a long-term structural risk to Wix's core business and restricting future revenue expansion.
  
• Wix's ongoing need to invest heavily in marketing for new customer acquisition, as well as in platform innovation to keep pace with rapid technological change and new user demands, could compress net margins and future profitability if rising costs are not offset by even higher revenue growth.

Valuation

• The assumed bullish price target for Wix.com is $255.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Wix.com's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $255.0, and the most bearish reporting a price target of just $160.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $2.8 billion, earnings will come to $535.5 million, and it would be trading on a PE ratio of 38.0x, assuming you use a discount rate of 11.8%.
  
• Given the current share price of $120.39, the bullish analyst price target of $255.0 is 52.8% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.