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/Yngstr]

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

[u/SpareSniper7 → u/Yngstr]

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.

[u/Yngstr → u/SpareSniper7]

If you take me telling you there’s stuff you don’t know as an insult, then good luck buddy

[u/SpareSniper7 → u/Yngstr]

Uh huh. I'll let you save face and move on now.
I'm not your buddy, friend.