Wix.com ( NASDAQ: WIX ) shares surged 13% on Monday after it was reported late on Friday that activist investor Starboard Value had taken a stake in the web development company, a move that investment firm Truist said could be an "additional catalyst" for the stock.
Analyst Naved Khan said the involvement of Starboard, which is reported to have a 9% stake in the company, could help the company's management and board of directors. The hedge fund could increase scrutiny and improve the company's execution, especially as Wix ( WIX ) looks to achieve a free cash flow margin of 20% and "healthy top line growth."
"Given Starboard's track record, we think it would initially look to work with the board collaboratively on a number of fronts," Khan wrote in a note to clients, including exploring strategic partnerships, reducing share count and being efficient with capital allocation, including being more aggressive with its stock buyback program.
Shares of Tel Aviv-based Wix ( WIX ) have declined more than 48% year-to-date , while competitor GoDaddy ( NYSE: GDDY ) has dropped 11% over the same time frame.
Last year, Starboard also disclosed a stake in GoDaddy ( GDDY ), writing in a filing at the time that it thought shares were "undervalued."
In midi-August, Wix.com ( WIX ) reported mixed second-quarter earnings and narrowed its revenue guidance for the remainder of 2022 .
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Wix surges 13% as Truist says Starboard involvement an 'additional catalyst' for the stock