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‘Wix is now our largest position in the technology sector. We bought it after a good-sized correction in U.S. technology stocks, during which the Nasdaq Composite fell about 9% from its recent high near 23,000.’
‘We think this pullback has created a few sensible opportunities in companies whose main businesses are unlikely to be hurt by artificial intelligence. Wix looks like one of them to us. At a market value of roughly $5.2 billion and trading at about 16 times next year’s earnings, the stock seems reasonably priced.’
Wix is the leading provider of website-building tools for small and medium-sized businesses. Its only significant direct competitor is Squarespace. Shopify is more focused on e-commerce and, while it can be called a competitor in a loose sense, it operates in a different niche that is much more commerce-heavy — an area Wix does not chase.
It is true that artificial intelligence has made building websites easier. But ease of building has never been Wix’s real advantage. Its drag-and-drop editor is simple enough, yet the true durability of the business lies somewhere else. For many owners, a website has become essential operating equipment. It is often the main way they attract and serve customers. If the site goes down — even for a few hours — real revenue can be lost. It is like a store that cannot open its doors on a busy Saturday.
This is why Wix has built a genuinely integrated ecosystem. When a visitor fills out a form, Wix handles the whole process — whether it is booking a consultation, capturing a lead, or anything else. Owners can update blogs, articles, and videos whenever they want using nothing more than the drag-and-drop editor — no programmers, no code. That saves real money. The platform also gives detailed analytics on many points, including where visitors come from by continent and region (and plenty more), plus built-in tools to improve search-engine results.
It is this full package — the builder, the content system, the analytics, and the marketing tools all working together — that creates real staying power. Most users pay only about $10 to $15 a month. At that price, there is little reason to switch to something less reliable. An outage of even two or three days can cost customers and erode trust, hurting the business’s reputation.
Wix recently bought Base44, a vibe-coding tool that competes with Replit and Lovable. They got a steal on it for $80 million. The purchase may prove useful, but we do not yet know how much it will matter.
Even if the Base44 acquisition turns out to be a complete bust and leads nowhere, we still estimate that Wix can generate about $400 million in free cash flow. With strong customer retention and a very large market ahead of it, the business should be able to grow at mid-single-digit rates for many years. At 20 to 24 times earnings, that kind of company would be worth considerably more than it is today.
Wix also carries very little debt. Putting all these pieces together, we believe the company could reasonably be valued between $9 billion and $12 billion over time — offering substantial upside from today’s price.
Like every investment, this one has risks we watch carefully. A drop in net revenue retention, especially with newer customers, would concern us. Heavy spending on new projects could also weigh on profits for a while. On the other hand, a return of better sentiment toward technology stocks could provide a helpful lift.
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This communication is provided for informational and discussion purposes only. It does not constitute investment advice, a recommendation or solicitation to purchase, sell, or hold any securities, or any offer to buy or sell securities. Ironhold Capital Fund I, L.P is a Delaware private fund operating under Rule 506(c) of Regulation D and is exempt from registration with the U.S. Securities and Exchange Commission. Ironhold Capital owns positions in Wix.com within its Delaware fund and across other separately managed accounts. However, we may increase, reduce, eliminate, or otherwise change our position in Wix.com or any other security at any time without prior or subsequent notice.
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