As Plumbers Go Online, Israeli Website-Builder Wix BoomsDavid Wainer
Wix.com is counting on hairdressers and plumbers taking their business online after a sell-off pushed its stock below its initial public offering level.
Wix’s stock almost doubled in less than four months after it raised $127 million on the Nasdaq last year, the biggest IPO out of Israel since 2007. The gains were generated amid the best year for U.S. initial public offerings since the financial crisis. A decline in technology stocks led Wix to cancel a secondary offering on March 31 and its stock is down 43 percent this year.
“There’s been a sell-off of growth names and that’s hurt Wix,” said Kerry Rice of Needham & Co., who has a buy rating on the shares. “But if you look at the company’s fundamentals, they’re very strong. They have a subscription model with a lot of visibility. I don’t expect them to see a downward slide in growth.”
Wix’s decline has little to do with its financial prospects, Rice said. Internet company stocks such as Groupon Inc. and Twitter Inc. have been among the worst-performing in the past month. Yet Wix’s 2014 earnings forecast, announced earlier this month, beat analyst estimates and sales have nearly doubled in each of the past two years.
As of March 31, Wix had 46.2 million users, adding a record 4 million in the last quarter alone. Analysts expect sales to reach $187 million by 2015, according to the average of five estimates surveyed by Bloomberg.
Wix CEO Avishai Abrahami says the company has grown quickly by unearthing the natural phobia of coding and programming afflicting millions of small businesses. Wix.com offers free tools for establishing an online presence with a simple way to drag and drop elements into Web pages.
“It used to be a real pain to build a website,” Abrahami said while sitting on the company’s rooftop terrace on the Tel Aviv waterfront. “Our job is to make it intuitive.”
Today, Wix employs 648 people. Abrahami now seeks to take over mobile apps with last quarter’s acquisition of Appixia, an Israeli company whose technology to simplifies the mobile-app-making process.
Wix’s main competitors are Squarespace, which says it has hundreds of thousands of paying customers, and Weebly.com, with over 20 million users. Other competitors include GoDaddy.com, which hosts websites while providing site-making tools. Wix is the fastest growing and largest in its field, according to Rice.
Brothers Avishai and Nadav Abrahami and their business partner Giora Kaplan got the idea for Wix in 2006 as they struggled to create a website for a different company.
Abrahami says Wix, where engineers and developers represent half of head-count, has technology that lets users build professional-looking websites that use the latest coding language. E-mails to Weebly went unanswered while Go-daddy declined to comment. Squarespace chief executive officer Anthony Casalena said his technology “stands out from others.”
As yellow pages phone books grow obsolete, even the tiniest businesses are increasingly interested in establishing a presence online, said Jason Helfstein, an analyst at Oppenheimer in New York. That will help Wix expand to some 150 million subscribers by 2019, Helfstein said.
“Over time, there’s no reason why your neighborhood plumber won’t build his own website,” said Helfstein. “The amateur photographer used to have to pay somebody thousands of dollars to start a decent-looking website. All of a sudden he can do it himself.”