Please ensure Javascript is enabled for purposes of website accessibility

Why Wix.com Stock Was Slammed Wednesday

By Daniel Sparks – Updated Apr 15, 2019 at 3:57PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The website-building platform is growing faster than expected. So why are shares trading lower?

What happened

Shares of website-building platform Wix.com (WIX -4.16%) took a big hit on Wednesday, falling as much as 12.9%. As of 11:28 a.m. EST, the stock was down 12.4%.

The stock's pullback follows the company's fourth-quarter earnings release, which featured better-than-expected revenue and adjusted earnings per share. But investors may be hung up over management's worse-than-expected forecast for full-year revenue.

A chalkboard sketch of a chart showing a stock price moving lower.

Image source: Getty Images.

So what

Wix reported fourth-quarter revenue of $164 million, up 39% year over year. This was ahead of management's guidance range for revenue to be between $161 million and $162 million. On average, analysts were expecting revenue of $162 million. The company's adjusted earnings per share was $0.42, up from $0.16 in the year-ago quarter and easily beating a consensus analyst forecast for $0.32. 

"2018 marked our fifth consecutive year of greater than 40% revenue growth since our IPO in combination with record margin expansion, driving free cash flow of over $100 million," said Wix CFO Lior Shemesh in the company's fourth-quarter earnings release. "This combination of growth and profitability highlights our ability to generate positive returns on investments in our business."

The company's forecast for full-year 2019 revenue between $755 million and $761 million, however, disappointed. The midpoint of this guidance range is below analysts' consensus estimate for 2019 revenue of $761 million. In addition, this guidance implies 25% to 26% year-over-year revenue growth -- a meaningful deceleration from Wix's fourth-quarter revenue growth.

Check out the latest Wix earnings call transcript.

Now what

While Wix's full-year revenue outlook may not have lived up to analysts' view, management is optimistic about the future.

"In 2018 we rolled out more products than ever before," said Wix CEO Avishai Abrahami in the quarterly update, "and in 2019 we are looking forward to delivering these products to users and expanding our reach into new and exciting markets. We believe that these new products and markets will drive growth in the coming years."

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Wix.com. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Wix.com Stock Quote
Wix.com
WIX
$72.67 (-4.16%) $-3.15

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.