Investidea: Wix, because you need your own website

Инвестидея: Wix, потому что нужен свой сайт

Today we have a very speculative idea: invest in an Israeli Wix website builder (NASDAQ: WIX), in order to capitalize on the rebound of stocks after their strong fall.

Growth potential and duration: 27,5% for 20 months; 59,5% for 3 of the year; 125% for 9 years.

Why stocks can go up: they recently fell hard, and the company's business has good potential.

How do we act: take now 156,65 $.

When creating the material, sources were used, inaccessible to users from the Russian Federation. Hopefully, you know, what to do.

No guarantees

Our reflections are based on the analysis of the company's business and the personal experience of our investors, but remember: not a fact, that the investment idea will work like this, as we expect. Everything, what are we writing, Are forecasts and hypotheses, not a call to action. It is up to you to rely on our thoughts or not..

And what about the author's predictions

Research, for example this and this, talk about, that the accuracy of target price predictions is low. And that's ok: there are always too many surprises on the stock exchange and accurate forecasts are rarely realized. If the situation were reversed, then funds based on computer algorithms would perform better than people, but alas, they work worse.

Therefore, we do not try to build complex models.. The profit forecast in the article is the author's expectations. We indicate this forecast as a guideline. As with the investment in general, readers decide for themselves, it is worth trusting the author and focusing on the forecast or not.

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Investment editorial office

What the company makes money on

This is an Israeli company, whose virtual toolkit allows you to create sites. How it works, can be viewed in the tutorial video.

Wix has a free version, but mostly business needs features, only available in paid versions of Wix.

According to the annual report, the company's revenue is divided into two segments.

Creative subscriptions — 79,2%. This is a subscription to paid options for creating and managing online content. 85% subscribers take annual plans, 15% pay monthly. Segment gross margin - 78,62% from his proceeds.

Business solutions — 20,8%. This business management software and services, for example for making payments. Sales of programs are also taken into account here., created by other companies, for example G-Suite from Google. Segment gross margin - 27,84% from his proceeds.

  System No. 2. US 30-Year Bond Futures.

Revenue by country and region:

  1. Countries of North America - 58%, US share in the company's revenue - 48,65%.
  2. Europe - 25%.
  3. Latin America - 5%.
  4. Asia with other regions - 12%.

The company is unprofitable.

Инвестидея: Wix, потому что нужен свой сайт

Arguments in favor of the company

Fell down. Over the past year, stocks have dropped dramatically: from 353 to 156,65 $. I think, we can take them in anticipation of a rebound.

Relatively inexpensive. Now the company's shares are only 20% expensive, than 2 years ago. But since then, her revenue has grown by 60%. I think, that investors could mark the company's progress by pumping up its quotes.

Also, the company does not have the largest P by the standards of a loss-making startup. / S — 7,67. And its capitalization is also not very large - $ 8.92 billion. This will make Wix stocks more attractive and easier for investors to pump., who decided to take advantage of the fall in quotations.

The best, sure, ahead of. Eternal quarantine will increase the demand for the company's services in terms of building sites, as well as in terms of servicing the online infrastructure of businesses. So one can hope, that in the long term, the company's financial performance will improve.

What can get in the way

Competition. The competition of the company is made by such services, like Weebly, WordPress, Shopify и Squarespace. In some ways they can be better, in something worse - but the result is the same. The presence of competitors in the market forces Wix to constantly invest in marketing and R&D at very large sums.. And it doesn't let me hope, that Wix's operations will be profitable soon. So maybe, that Wix will spend on buying different startups, which will negatively affect its quotes.

Is there a thaw? The big drop in Wix stock was caused by, among other things, and so, that in August she lowered her forecast for this year: the lifting of quarantines slowed down the growth in demand for her services. But, how can we see, with the spread of new strains, the freemen ended, and the nuts are tightened again, which means, there will be an increase in online activity of businesses and consumers. Periodic improvement in the epidemiological situation will negatively affect the Wix quotes and slow down the growth of its financial indicators., to which investors will react extremely nervously.

Accounting. According to the latest report, the company has a large amount of debts: 1,859 billion dollars, of which 720.363 million needs to be repaid within a year. However, she does not have much money at her disposal.: 294 mln in accounts plus 27.988 mln counterparties' debts. The company also has other liquid assets.: long-term deposits in the amount of 541.324 million and securities in the amount of 417.136 million.

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But in general, the company's debt is quite large and will scare off some investors due to the impending rise in the cost of loans.. Plus, Wix is ​​unprofitable - this factor contributes to the rapid consumption of its cash reserves.. So you should be mentally prepared for the news about the bankruptcy of the company..

maybe, for, to avoid bankruptcy, the company will actively engage in additional share issue. Quotes may suffer from this., if there is not enough demand for new shares.

Israel. The company is Israeli and operates primarily in Israel. This has certain advantages.: high quality of programmers' work with their relatively low cost, - but if the situation in Palestine aggravates, ESG investment funds may start a campaign of persecution of Israeli issuers. It is better to take this risk into account..

What is the bottom line

You can take shares now by 156,65 $. And then we have three options.:

  1. wait 200 $. I think, then you'll have to wait 20 months. But, Considering, how quickly the situation is developing with new strains, possibly, we will reach this level faster;
  2. wait 250 $. Here it is worth counting on the deadline 3 of the year;
  3. hold shares 9 years, to see, how will they get back to the mark 353 $. Well, or how the company goes bankrupt.

But one should keep in mind, that the idea is very speculative and these stocks will be volatile.

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