What to Expect from Wix.com Stock Ahead of Earnings

WIX stock is currently trading at a premium price

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Wix.com, Ltd. (NASDAQ:WIX) is an Israeli software company that allows users to create their own websites without any coding experience. The company focuses on making the website-building process as simple and accessible to people with all experience levels. Wix.com is scheduled to report earnings this week on November 12 before the opening bell, and will be seeking to improve from its lackluster earnings report last quarter. WIX stock is currently trading up 231% from its 52-week low of $76.81 tapped on March 18. Yet, WIX stock is trading 20.5% off from its 52-week high of $316.34 hit on August 6. Overall, WIX stock has done exceptionally well in 2020, nearly doubling in value year-to-date.

Wix.com has beat expectations on three of its four most recent earnings reports. Looking back to the third quarter of 2019, Wix.com beat expectations by $0.08. The company reported an earnings per share (EPS) of $0.41. In the following quarter, fourth quarter of 2019, Wix.com replicated its previous quarter margin beat of $0.08 per share. However, Wix.com dropped its reported EPS down to $0.39. The company further dropped its reported EPS down to -$0.01 in the first quarter of 2020, but still managed to beat expectations by $0.02. Most recently, Wix.com missed its earnings target by a huge margin of $0.50 for the second quarter of 2020. The company reported an EPS of -$0.26 instead of the expected EPS of $0.24. For Wix.com's upcoming earnings report slated for Thursday, Wix.com is expected to report an EPS of -$0.15.

WIX stock is currently sporting a ranking of 84 out of 100 on the Schaeffer's Volatility Scorecard (SVS). A high SVS ranking like 84 indicates that WIX stock has consistently delivered bigger returns than its options implied volatility (IV) levels have predicted, meaning WIX stock may be a strong candidate for premium-buying strategies going forward. Using Schaeffer's robust historical database, we conduct extensive research on each underlying equity and determined which of those underlying equities’ options have historically had underpriced or overpriced options, which is how the SVS rankings are developed.

Although Wix.com is one of the biggest names amongst the build-a-site companies, there is no shortage of competition in the space. Wix.com has to compete for market share with the likes of WordPress, Squarespace, and Shopify (SHOP), undoubtedly limiting the company’s growth opportunities. That being said, out of the competitors mentioned, only Shopify trades publicly like Wix.com. Further, Shopify only focuses on the development of e-commerce sites, making Wix.com the frontrunner for consumers looking to invest in a web-building software company. This is likely the reason for both Wix.com and Shopify’s inflated stock prices today. Despite Wix.com’s relatively poor bottom-line performance, its revenue growth could be enough to keep pushing the stock price up over the coming 12 months

Stock investors, remain cautious about purchasing this stock. There has yet to be a sign of the company becoming profitable based on a deep-dive of the fundamentals. Although WIX stock will likely continue rising in price, there may safer options for investment available on the market today.

 

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