Wix stock continued to rise in value as revenue continued to grow and the company moved ahead to meet its Rule of 40 valuation metrics. Investors returned to companies with recurring revenues that are reliable, and the stock price soared up to $230 per year. Is Wix an attractive growth stock in 2025?
Wix Catalysts
Wix stock prices soared by 2024 due to a number of catalysts. Permira’s acquisition of Squarespace for $7.2 billion was the most significant. It was important because both companies were similar and the buyout was seen as a vote of confidence by the industry.
Wix.com also had a good year this past, as the churn rate remained low while its customer base grew. In its last quarter results, it showed over 278 millions registered users on the platform.
The company’s revenues grew, but at a slower pace than the time of pandemic. The revenue grew by 13% over the past year, to $445 millions. This is a significant increase over Q1’22 when it was $342. The revenue from its creative subscriptions increased to $318 millions, and the revenue for business solutions grew to $125,000,000.
Wix has seen its revenue continue to rise, going from $1.2billion in 2021 up until $1.56billion in 2023. The company anticipates that its revenues will increase to $1.76 Billion from $1.75 Billion. Analysts predict that Wix will have revenue of $1.76 billion for this financial year, and $2.02 Billion in the following year.
Wix is also starting to make a profit. From a loss of $424,000,000 in 2022, it has now turned a profit over $33.1,000,000. Third quarter net income increased to $29 millions, and the nine month profit reached over $90,000,000.
Why WIX has been doing so well
Several factors have aided in its rapid growth. The company has formed partnerships with several agencies that have used its platform to serve their clients. Its partners’ revenue grew to $155 millions in the third-quarter from $70million a year ago, according to its most recent figures.
Wix also has benefited from artificial intelligence. It has implemented it across the platform. Users can use the AI tools for content creation and marketing.
Wix also has benefited by introducing new monetizing options. It has also become an important player in the payment solution market, as it offers a very small percentage of all revenues that are generated through its platform.
Wix’s stock is gaining popularity among analysts. Average target price is $230 – higher than current $226. Baird Capital, Benchmark Capital, and RBC Capital are among the companies with some of the most positive analysts.
Analysts believe Wix’s forward P/E ratio of 37.40 is fair, despite it being higher than the 25 median for its sector. This is because the company believes it will soon reach the 40-metric rule. Add growth and margins to get the rule. This is because its revenue forecast is 14 percent, and its margins are 26 percent. Management said:
“Even with the earlier-than-expected achievement of this target, there is still room for further growth acceleration and ample margin expansion in our financial algorithm for 2025 and beyond.”
Stock price Analysis of Wix
Weekly chart showing the Wix stock price is bullish over the last few months. The rally began in 2022, when the price bottomed out at $52.93. The price has now risen to $220 and is above the Fibonacci retracement 50% level.
Wix formed the same golden cross pattern as well in September. The price has moved up above the top of the channel, and it is slowly creating a bullish pattern. It will therefore likely continue to rise as the bulls aim for the next important resistance level of $295 – the 78.6% point.
This article appeared first on the ICD.
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