Is Now The Time To Look At Buying Wix.com Ltd. (NASDAQ:WIX)?

Today we're going to take a look at the well-established Wix.com Ltd. (NASDAQ:WIX). The company's stock saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$305 and falling to the lows of US$200. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Wix.com's current trading price of US$208 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Wix.com’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Wix.com

Is Wix.com still cheap?

Wix.com appears to be overvalued by 40% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$208 on the market compared to my intrinsic value of $148.57. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Since Wix.com’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Wix.com generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Wix.com, at least in the near future.

What this means for you:

Are you a shareholder? If you believe WIX should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the risk from a negative growth outlook, this could be the right time to reduce your total portfolio risk. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on WIX for a while, now may not be the best time to enter into the stock. Price climbed passed its true value, in addition to a risky future outlook. However, there are also other important factors which we haven’t considered today, such as the track record of its management. Should the price fall in the future, will you be well-informed enough to buy?

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example, Wix.com has 3 warning signs (and 1 which is a bit unpleasant) we think you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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