Wix’s stock price continued to fire on all cylinders in 2024, as its revenue growth continued and it moved to achieve its rule of 40 valuation metric ahead of schedule. It also soared to a yearly high of $230 as investors returned to software companies that provide reliable recurring revenue. So, is Wix a good growth stock for 2025?
Catalysts for Wix
Wix’s stock price soared in 2024, helped by numerous catalysts. The most notable one was Squarespace’s $7.2 billion acquisition by Permira. This was an important buyout because the two companies are similar, and it was a sign of confidence in the industry.
Wix.com’s business also continued doing well this year as its churn remained low and its customers rose. Its last quarterly results showed that it had over 278 million registered users in the platform.
Its revenue growth continued, albeit slower than during the pandemic. Revenue rose by 13% year over year to $445 million, a strong increase from the $342 million it made in Q1 ’22. Its creative subscriptions rose to $318 million, while its business solutions rose to over $125 million.
Wix’s annual revenue has continued rising, from $1.2 billion in 2021 to $1.56 billion in 2023. The company expects its revenue to increase from $1.75 billion to $1.76 billion. Analysts expect Wix’s revenue to be $1.76 billion this year and $2.02 billion in the next financial year.
Wix has also started to turn a profit. It moved from a net loss of over $424 million in 2022 to a profit of over $33.1 million. The third quarter net income jumped to $29 million, while the nine-month profit was over $90 million.
Why WIX is doing well
A few things have helped to supercharge its growth. It has created partnerships with agencies, which have turned to its platform for their clients. The most recent numbers showed that its partners revenue rose to $155 million in the third quarter from $70 million a year earlier.
Wix has also benefited from the tailwinds of artificial intelligence, which it has deployed across its platform. For example, users can now use its AI tools to create content, and other marketing tasks.
Wix has also benefited from introducing more monetizing solutions. Like Shopify, it has become a big player in payment solutions since it takes a small cut on most revenues generated on its platform.
Analysts are optimistic about the Wix stock price. The average target is $230, higher than the current $226. Some of the most optimistic analysts are from companies like Baird, Benchmark, and RBC Capital.
Analysts also believe that Wix is fairly valued despite its 37.40 forward price-to-earnings ratio, which is higher than the sector median of 25. One reason for this is that the company expects to hit the rule of 40 metric of 40 soon. This rule is achieved by adding its growth and margins. In this case, its forward revenue guidance is 14%, while its forward margin is 26. The management said:
“Even with the earlier-than-expected achievement of this target, there is still room for further growth acceleration and ample margin expansion in our financial algorithm for 2025 and beyond.”
Wix stock price analysis
The weekly chart shows that the Wix share price has been bullish in the past few months. This rally started in 2022 when it bottomed at $52.93. It has now rebounded to $220, moving above the 50% Fibonacci Retracement level.
Wix also formed a golden cross pattern in September. It has moved above the upper side of the rising channel and is slowly forming a bullish flag pattern. Therefore, it will likely continue rising as bulls target the next key resistance level at $295, the 78.6% retracement point.
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