Wix Plunges 27% on Expense Surge; DeepValue Sees Opportunity if Guidance Holds

What happened

Wix shares cratered 27% on May 13 after Q1 results revealed a 46% year-over-year jump in operating expenses, overshadowing 15% bookings growth and 14% revenue growth. The DeepValue master report, however, argues the sell-off is overdone: it rates Wix a 'Potential Buy' at $52.7, citing strong cohort bookings, Harmony monetization potential, and a share count reduction of ~30% from the tender offer. The expense spike was partly driven by $90M in acquisition marketing and front-loaded Base44 compute costs, which management expects to normalize through 2026. Additionally, new user cohort bookings rose 46% year-over-year, suggesting the AI-led conversion story remains intact. The Hagens Berman investigation adds headline noise but does not alter the fundamental thesis yet; the next 6-9 months will prove whether Wix can sustain mid-teens growth while improving margins.

Implication

If Wix delivers high-teens FCF margin on a reduced share count (42M shares), the current price offers a compelling entry for patient investors; the key catalysts are Q2/Q3 results confirming Harmony-driven conversion and Base44 margin improvement.

Thesis delta

The expense spike and investigation heighten near-term risk and could delay sentiment recovery, but the core thesis remains unchanged—success hinges on Q2–Q3 execution. The pullback to $52.7 brings the stock closer to the attractive entry zone ($50), but requires proof that cost containment and revenue growth align with guided high-teens FCF margins.