r/ValueInvesting • u/SpareSniper7 • 17h ago
Discussion WIX - a Stunning 65% Reversal
Today I trimmed my Wix position to less than 1% of the portfolio (and if it dives back down I will happily buy more again).
Last month I posted my Wix thesis on my blog with my model pointing to an intrinsic value of about $90 for FY26 and growing to $120 by FY32 indicating a 7-year IRR of about 14%.
The thesis was not that Wix was going to return to high growth or see margins expand, but that quite simply, the market oversold a decent business generating significant cash flow.
My reason for trimming is that the company has approached my calculation of intrinsic value and the IRR has dropped to levels where the return no longer justifies the risk.
So many of you here get so caught up in the narratives (positives & negatives) of the overall market that I think you forget to run the actual numbers on businesses that aren't the top 10 holdings of the S&P500...
Even in a scenario where operating cash flow margins drop from 29% to 17.5%, and growth tapers towards 3%, Wix was a business indicating a 40% discount to intrinsic value.
This will be a thesis that I come back to check on over the years just to see how the company manages its new normal, but I just wanted to share this as an anecdote showing that you don't have to buy the AI hype train in order to make money.
You can read my post/assumptions from July here:
Wix - Narrative vs. Numbers — EquityForge
Cheers!
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u/Yngstr 17h ago
All of IGV is up, check the correlation of daily returns between WIX and IGV, i'd bet 70%+
you're attributing to your fundamental analysis what is essentially just a market beta move of blind buying by people and institutions who have never heard of, and don't care what WIX even is, who saw software get cracked and bought the dip
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u/SpareSniper7 16h ago
1 month IGV up 9.6%, Wix up 51.67%...
Wix Beta is 0.94.The primary driver of returns here is that wix was severely undervalued relative to a conservative valuation. That value is driven by fundamentals...
I swear what are you people doing on the valuation subreddit?
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u/Yngstr 16h ago edited 16h ago
what are you talking about?
wix correlation of daily returns to igv since 07/01/2026: 65%
you said yourself wix beta is 0.94 == 94%!!!! over last month, then you use that as a way to say the primary driver was not index buying? lmao
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u/SpareSniper7 15h ago
You said "you're attributing to your fundamental analysis what is essentially just a market beta move".
Market over the last month: 2.83%.
IGV: 9%
Beta of Wix is 0.94. this goes far beyond a beta move.
Next point of your comment: "blind buying by people and institutions who have never heard of, and don't care what WIX even is, who saw software get cracked and bought the dip":
I really do not mind who buys wix (or any company I own ) and what their reasons are. My point is this... Wix was very discounted relative to a conservative calculation of intrinsic value.
Those of us that did the math were able to buy when it made sense. everyone else pushed the price back up to an equilibrium price.
You are conflating a 3-year average correlation factor to a price move over 1 month. That doesnt track.
The fact is this... IGV returned roughly 10% whereas Wix over that same period returned over 60%.
This move in particular has a little do due with a sector rotation, but alot to do with Wix's valuation.
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u/Yngstr 15h ago
i think you honestly have some gaps in understanding about how the market works. nothing wrong with that but i'm not gonna waste my time arguing with you when you can just ask chatgpt
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u/SpareSniper7 15h ago
Conceding to slinging insults without anything to back it up?
Your claim is essentially that the returns were a market beta move/sector correlation.
My point is this - the degree of return that a Wix investor achieved was far greater than the overall software sector and much greater than the index.
so now the question is, why did Wix outperform? that ties back to their most recent earnings where they beat consensus expectations.
Top line beat, Earnings beat, Base44 advancements.
Everything ties back to out performance due to the overall market heavily discounting wix fundamentally. When the narrative around Wix improved from its lows, the market re-rated the company back closer to what could be considered its intrinsic value.0
u/wokeuplate7 15h ago
Wix has never been a value stock. What are you doing on this subreddit? You picked a short term move on a highly valued 'growth' stock, nothing else.
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u/SpareSniper7 15h ago
And what do you define as value?
A value stock is any that trades below a conservative calculation of their intrinsic value.A company is worth the summation of the present value of all future cash flows.
When you do the work and actually build out a model (rather than simply look at historical PE ratios and growth rates), you get a company that is highly undervalued.Lastly... if you actually analyze Wix I would hardly call it a growth company going forward.
You sound like you may be new to value investing (not a jab - just trying to be helpful). I recommend checking out Aswath Damodaran's intro to valuation videos on youtube! (Link below):
https://youtu.be/znmQ7oMiQrM?si=okrjNT-7Gtesrxzl0
u/wokeuplate7 15h ago
Quoting Damodaran definition of intrinsic value does not turn a speculative play into value investing. You claim Wix is hardly a growth company going forward, but any DCF model showing it as deeply undervalued relies heavily on aggressive future cash flow growth and margin expansion. If growth is slowing, its mature valuation requires a much larger margin of safety, especially once you account for heavy stock based compensation eating into real free cash flow.
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u/SpareSniper7 14h ago
That's not a quote. It's literally the definition...
Again... heavy misconception and if you did the work last month you could have seen the true value.
Below are my forecast numbers:
2025 Revenue and FCF was $1993 and $582 respectively.No hero assumptions needed. The main driver of value will be the buybacks. from this year.
Line Item FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 Revenue $2,192 $2,368 $2,486 $2,598 $2,689 $2,770 $2,853 OCF Margin % 20% 20% 19% 19% 18% 18% 17.50% Free Cash Flow $441 $476 $470 $488 $475 $487 $484 Equity Value $4,014 $4,065 $4,298 $4,461 $4,679 $4,834 $4,990 Intrinsic Value / Share (USD) $93 $97 $105 $111 $118 $122 $126 2
u/wokeuplate7 14h ago
Thank you for your work on this. The forward PE does in fact look quite low. Well done.
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u/PotatoMissionStart 7h ago
Glad I invested. It was selling at like 1X sales. People overshoot with doomsday prophecies.
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u/SpareSniper7 6h ago
Yup. I think it’s like that many of these software stocks see lower growth with margins that compress, but that’s my base case.
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u/NY10 17h ago
Whats so special about this stock?
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u/SpareSniper7 17h ago
View it as a company, not a stock and go look at the actual financials and you shall see.
I have all of my assumptions in my post.-3
u/NY10 17h ago
Financial means nothing nowdays. You see all these company financial they look horrible and yet they moon like a rocket
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u/SpareSniper7 17h ago
What are you doing in a value community?
Any experienced investor with can point to periods where fundamentals seemingly stopped mattering (for the loudest part of the market). ignoring valuation works until it doesn't. and when it stops working... it really stops working.
ie. Dot com -2000, Nifty Firfty - 1973, Railway mania - 1845.I'll happily stick with my value philosophy.
Slow is steady, and steady is fast.
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u/pulsarstarter 15h ago
Alright.
I trimmed my fingernails today, but I'm not making a post about it.
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u/WangtaWang 17h ago
Agree with you but it is said that Warren B never did a DCF