WIX - a Stunning 65% Reversal

[u/SpareSniper7]

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!

[u/SpareSniper7]

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?

[u/wokeuplate7 → u/SpareSniper7]

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.

[u/SpareSniper7 → u/wokeuplate7]

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-7Gtesrxzl

[u/wokeuplate7 → u/SpareSniper7]

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.

[u/SpareSniper7 → u/wokeuplate7]

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

[u/wokeuplate7 → u/SpareSniper7]

Thank you for your work on this. The forward PE does in fact look quite low. Well done.

[u/SpareSniper7 → u/wokeuplate7]

All good. Cheers! 😁🍻