Should You Invest in Wix.com?

PHOTO CREDIT: Wix.com

OVERVIEW

Wix.com is a company that offers cloud-based solutions to its consumers. Customers who use these solutions can make their own custom websites and different applications in several countries. The company is based in Tel Aviv, Israel.

Why You Should?

1. The COVID-19 Pandemic has caused demand for Wix.com’s products to rise as small and medium businesses, as well as individuals, create e-commerce platforms to stay afloat during this pandemic. Customers on Wix.com have the ability to customize websites as well as accept payments through Wix Payments. This will benefit the company in the future.
2. Wix has seen a rising demand for its products long before this pandemic. Small and medium businesses have money to spend on innovating to get their products out to a wider audience. These businesses sold both at physical and digital storefronts which benefited both themselves as well as companies like Wix.com.
3. Consumers from most parts of the world can use Wix.com’s products. Wix operates in countries in North America, Asia, Latin America, and many more countries. This reach will benefit the company in the long-term.
4. The company has strong financials over the past couple of years. The company has seen rising revenues due to strong growth but has not turned a profit yet. The graph below clearly shows this. Because Wix.com has not shown Wall Street that it can be consistently profitable, it might mean that the stock might face volatility in pricing in the future. This does not make Wix.com a safe investment. In the financial year of 2019, the company reported revenues of around 761 million but posted a loss of around 86 million. The company reported less revenue in the financial year of 2018 when it posted revenues of around 604 million. However, it also reported fewer losses at around 37 million.

PHOTO CREDIT: Yahoo Finance

Why You Should Not?

1. Wix.com faces competition from several players. Companies like Square and Shopify have similar products to the ones that Wix.com has. Large companies like Amazon and Facebook also offer small and medium businesses to sell on their websites. This entrenched competition might hurt the company in the future.
2. Wix.com has to deal with a weak economy in the years ahead. Small and medium businesses have been crushed by this pandemic and no longer have the cash to spend on products like Wix. This will negatively impact the company until the economy starts to improve again.

MY OPINION

In my opinion, I think that Wix.com is a great long term investment because of the wide range of well-integrated products that it offers as well as the rise in demand for its products. However, strong competition and a weak economy might hurt the company in the future.