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Why Wix Stock Soared 41% Higher in February

By Jon Quast - Mar 2, 2021 at 10:52AM

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A strong finish to 2020 and raised guidance for 2021 was enough to excite investors and Wall Street alike.

What happened

Shares of (WIX -5.04%) soared 41.1% higher in February, according to data provided by S&P Global Market Intelligence. The stock rose modestly until the middle of the month when it reported quarterly financial results. After that positive report, Wix exploded higher.

So what

Wix's revenue for 2020 was up 30% year over year to $989 million. The company has a range of products and services that support small businesses and individuals in building an online presence -- something that was pushed forward because of the pandemic. But the company's growth rate accelerated even through the end of the year, with fourth-quarter revenue growth of 38%. 

A businessman rides a rocket ship expelling cash exhaust over a multicolored bar chart.

Image source: Getty Images.

This strong finish to 2020 inspired Wix management to raise its guidance for 2021. For the year, it expects year-over-year revenue growth of 29% to 30%, taking full-year revenue to almost $1.3 billion. The company's free cash flow is expected to fall to $60 million-$70 million, down from over $129 million in 2020. However, part of this is due to establishing a new headquarters for the company.

Now what

Thinking about the long-term trend, Wix just surpassed 200 million registered users. The company has done a good job of getting users signed on for free before compelling them to upgrade to paid products.

But as good as it's been, management isn't resting on its laurels. It's set a goal for 50% of all new internet sites to be built by Wix over the next several years. That's a huge goal, and coming anywhere close would likely result in continuing robust growth for this company.

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