The bull case for WIX
What is WIX?
Wix.com is an Israeli company focused on webdesign with a freemium model of monetization. The proposition it is clear, Wix offers a toolkit and hosting for anyone to build a website for free. Monetization comes with extra services as storage, a domain and other sets of “extras”.
Wix is effectively a mousetrap for new SMB or entrepreneurs that don’t want to go for any of the other solutions (more on this later) and choose the easiest and smoother one, getting locked in the Wix platform and unable to port their website. Once they grow Wix is probably not the best place to be, but the law of sunk costs applies here. They first cope with extra subscription to have extra storage, they increase the products and posts and then when they want a better SEO and a domain maybe Wordpress is the optimum service, but they only effective way to change is to build the place up from scratch.
Wix competition then would be, aside from people that go for Wordpress, Weebly, but also Squarespace and… Shopify. Essentially anyone that allows a rapid setup of a website. Wix touts itself as a Saasy business with cohorts, ARR and the lot.
So far so good. They were a covid beneficiary and they withdraw guidance as positive conditions were too good to believe for them to last the whole year. Stock went up big.
The point
That part was mere introduction to put you in the field, let’s see what we can see into the future and what the landscape looks like. I start with the thesis:
Wix will become/is an ecommerce facilitator for SMB that will put them closer to Square, Shopify and payments.
As part of the make it simple philosophy Wix offered an ecom portal for the webs they have, you could integrate your preferred payment method (Stripe, Paypal…). Well, they have dumped support for Stripe and now they offer Wix payments (supported in most of the developed world).
It is very interesting to see how ecommerce has pulled many players together and has dragged them to the same arena fetching them from different arms. SQ was a POS that has gone into web designing, Shopify was an all-in-one ecom facilitator and has become a payments warehouse. Wix was a web designing company that wants to become a payments one.
Forecasts aren’t accurate, but I see difficult they are trading under P/S much higher than 10x. And they soon will be valued in multiples of GMV.
This is more of a sparkling of an idea than a well structured line of thought, but I find these interesting, and normally it is enough to provide excellent returns.