Wix.com Ltd.'s (NASDAQ:WIX): Wix.com Ltd. develops and markets an Internet service that allows users to create Web content in North America, Europe, Latin America, Asia, and internationally. The company’s loss has recently broadened since it announced a -US$37.1m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$70.6m, moving it further away from breakeven. As path to profitability is the topic on WIX’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for WIX.
According to the 16 industry analysts covering WIX, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$61m in 2022. Therefore, WIX is expected to breakeven roughly 2 years from today. In order to meet this breakeven date, I calculated the rate at which WIX must grow year-on-year. It turns out an average annual growth rate of 49% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for WIX given that this is a high-level summary, though, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing I would like to bring into light with WIX is its debt-to-equity ratio of 178%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in WIX’s case, it has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are key fundamentals of WIX which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at WIX, take a look at WIX’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should look at:
- Valuation: What is WIX worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether WIX is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Wix.com’s board and the CEO’s back ground.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.