Could Wix.com’s Rally Finally Be Coming to an End? (WIX)
A breakdown from these levels could test lower trend line support at around $70
and a move below those levels could lead to a move to the 50-day moving average at $64.94 or S1 support at $61.87.
WIX has benefited from its freemium business model (only ~3% of users are paying customers),
but free customers bleed cash unless they’re converted into paying customers.
Raymond James recently downgraded Wix from Outperform to Market Perform due
to these valuation concerns following its 250% rise over the past 52 weeks.
The stock attempted to breakout from its upper trend line and R2 resistance at $77.13, but has since moved lower toward its R1 resistance at $72.52.
While the company is not profitable, its four-year compounded annual revenue growth
rate stands at an enviable 38% with nearly 100 million users on its platform.
After its recent move higher, the stock trades with a price-sales ratio of nearly 10x compared to an industry average of just 7x.