Wix is a misunderstood value play
The bull case for Wix argues that the market has overly penalized the stock on AI disruption fears, ignoring its sticky back-end ecosystem and cheap valuation.
The argument
The speaker argued that while simple drag-and-drop website builders are vulnerable to AI, Wix's back-end business solutions (payments, CRMs, bookings) create high switching costs, reflected in a 105% net retention rate. Additionally, the stock trades at an attractive 4-5x free cash flow with a hidden growth asset in its AI-native acquisition, Base 44.
The thesis, stress-tested
✓ What validates it
- ✓Stabilization or growth in creative subscriptions and business solutions segments
- ✓Successful integration of their custom LLM to lower inference costs
- ✓Base 44 monetization or user growth metrics
▸ Risks discussed
- ▸AI disruption from tools like Cloud Code and ChatGPT
- ▸Lack of a structural moat
- ▸Potential drop in free cash flow if long-term contracts representing 80% of revenue are not renewed
- ▸No tangible assets to recover if the business fails
Hear it yourself
"I thought so too, but if you just look at the numbers and also the business case that I'm going to make, hopefully, I think it's a pretty interesting idea. Okay. Well, should we do it? Let's do it. Let's get into it. Since 2014, with more than 200,000,000 downloads, we have interviewed the world's best investors, studied deeply the principles of value investing, and uncovered many compelling investment opportunities. We focus on understanding businesses and intrinsic value, investing accordingly, and sharing everything we learn with you. This show is not investment advice. It's intended for informational and entertainment purposes only."
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