Checking Back in on This Growth Stock After Dropping 60%

Can Wix.Com stock bounce back after its bearish year?

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Wix.Com Ltd (NASDAQ:WIX) is a software company that provides a cloud-based web development platform for users worldwide. Through free and premium subscriptions, Wix allows millions of businesses and individuals to take their businesses online by providing the tools to create websites and mobile sites without coding.

The stock has decreased about 46% year-over-year and has lost 60% since its mid-February all-time high of $362.07. Shares of WIX have also fallen 42% year-to-date and Wix.com stock is currently attempting to recover from its annual low of $138.23, hit on Friday, December 3, though pressure at the 20-day moving averge has kept a lid on shares. The stock could be do for a short-term bounce however. Its 14-day relative strength index (RSI) sits at 27, putting it firmly in "oversold" territory. 

wix dec 13

Short sellers have been strengthening their bearish bets, with short interest up 2.9% in the last teo reporting periods, but a change of the wind could provide the setup for a short squeeze. Short interest makes up 7.6% of the stock's available float and would take over a week to cover at its average daily pace of trading. 

From a fundamental point of view, the equity has potential as a long-term growth play, and even more so at its current valuation. Although the software company is not profitable at this moment, WIX trades at a price-sales ratio of 6.73, which is attractive for a tech company with a proven high growth rate.

WIX has grown revenues 24% since fiscal 2020 and a jaw-dropping 188% since fiscal 2017. The firm has also delivered a $147.5 million increase in net income since reporting $165 million in net losses for fiscal 2020. The cloud-based software company has a manageable balance sheet with $1.03 billion in cash and $903 million in total debt, placing them in a good position for the coming years. Overall, Wix.Com stock's bearish run over the past year could potentially create a great buying opportunity for investors looking for strong growth potential.

 

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