Wix (NASDAQ: WIX) reported its second-quarter earnings earlier this month. The website-building platform beat analysts' estimates for revenue and earnings, sending the stock up in response to the news. Shares are now up almost 20% in the last month. However, the stock is still down over 50% this year, and with a market cap of only $4.1 billion, I think it is severely undervalued compared to its long-term earnings potential.
After reporting strong earnings, Wix has shown once again why it belongs in your portfolio -- here's why you should consider buying shares.
Wix's revenue grew 9% year over year in the second quarter to $345 million, while its bookings grew 3% to $355 million. This is a major slowdown from last year when revenue was growing over 30%. A lot of this weakness is coming from a decline in new website development, which management believes is occurring due to tough comparisons from the heart of the COVID-19 pandemic. But Wix is also feeling the effects of foreign exchange (FX) headwinds with the rising value of the U.S. dollar making its international sales less valuable, therefore hurting revenue growth. On an FX-neutral basis, revenue grew 11%, and bookings grew 7% during the quarter.
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Wix Shows Once Again Why It Belongs in Your Portfolio