Wix (NASDAQ: WIX) has seen its shares tumble roughly 77% from the January 2024 peak of $246, settling near $55 as the market grapples with the so-called SaaSPocalypse. The sell-off reflects mounting worries that AI-driven 'vibe coding' platforms could upend the traditional website-builder market. With the company set to report second-quarter earnings on August 4, investors are looking for evidence that its growth engine remains intact despite the disruptive forces.
AI disruption and the SaaSPocalypse
The broader software sector has been under pressure this year, with major names like Adobe, Workday, ServiceNow, and Figma all experiencing significant drawdowns. Wix, however, is particularly exposed because its core product—a drag-and-drop website builder—is directly challenged by emerging AI tools that allow users to generate fully functional websites and applications from simple text prompts. These 'vibe coding' platforms lower the barrier to entry even further, potentially eroding Wix's competitive moat.
In response, Wix has been actively adapting. The company acquired Base44 in an $80 million deal last year, a move that brought in a team focused on AI-driven development. It has also launched Wix Harmony, a product that blends vibe coding with its traditional drag-and-drop interface. These initiatives are part of a broader strategy to integrate AI into its offerings and stay relevant in a rapidly evolving market.
Recent financial performance
In the most recent quarter, Wix reported revenue of $541 million, up 14% year-over-year. Bookings grew 15% to $585 million, while transaction revenue rose 20% to $70 million. The company has credited some of this growth to Base44, which has quickly become a notable player in the vibe coding space. However, the heavy investment in AI has weighed on profitability. Analysts expect second-quarter revenue to come in around $552 million, a 12% increase, but earnings per share are projected at just $1.21—down sharply from $2.28 in the same period last year.
Management has already signaled headwinds. In the previous earnings call, they noted: “Our outlook accounts for the slower-than-expected start to the year in our Partners business as well as impact from productivity headwinds due to the war in the Middle East, which has pushed out certain important product rollouts for our professional audience.”
Valuation and buyback
The sell-off has left Wix trading at a forward price-to-earnings ratio of roughly 10, a level that some value-oriented investors find attractive. The company also initiated a share buyback program in its last earnings report, a sign that management believes the stock is undervalued. However, a low multiple alone is not enough to spark a recovery; the company must demonstrate that its growth trajectory can withstand the AI onslaught.
Technical outlook
From a technical standpoint, the weekly chart shows Wix breaking below the $55 support level in June, reaching a low of $40—a level that had held as support in June of the previous year. The stock has since formed a break-and-retest pattern, a classic bearish continuation signal. It remains below both the 50-week and 100-week exponential moving averages, suggesting that the downtrend is still intact. If the stock fails to hold above $55, the next major support is likely at $40.
As earnings approach, the market will be watching not only the headline numbers but also any commentary on AI competition, customer retention, and the trajectory of the Partners business. The outcome could determine whether Wix can stabilize or if further downside is in store. For context, other tech names have faced similar pressures; for instance, Reddit stock has slid 40% year-to-date despite a Q2 beat, and Palantir is steadying ahead of its own earnings. Meanwhile, broader market sentiment has been mixed, with the Dow surging on oil slides and earnings optimism.
This article is for informational purposes only and does not constitute financial advice.
