Your capital is at risk when you invest. Never risk more than you can afford to lose. Financial products are complex instruments and come with a high risk of losing money.

Wix Shares Surge After Starboard Value Takes 9% Stake

September 19th, 2022 -

About 3 Mins
Dotted Circle
Dotted Circle Alt2x

WIX

Wix.com shares were last trading up 12% in the mid-morning trading session as investors cheered activist investor Starboard Value taking a 9% equity position in the Israeli web development and management firm. The company also reported second quarter results that broadly beat estimates. Starboard said it took the position because it believed shares were undervalued and the company represented an attractive investment opportunity.

Wix shares are down 60% over the past 52 weeks, compared with a 26% decline in the Russell 3000 Computer Services subsector. Despite the lagging performance, Starboard’s position in the company could provide a lift to investor sentiment. Sell-side Wall Street analysts also welcomed the activist’s stake. The company trades at 3 times forward revenue estimates, which is considered cheap in the applications software industry.

Given the positive changes the activist’s stakes have brought about in other companies, such as Mellanox Technologies, Symantec and Darden Restaurants (the parent company of Olive Garden and Longhorn Steakhouse,) investors could be hoping that the addition of a strong independent voice could lead to greater value creation at Wix. Starboard has typically encouraged its investee companies to cut costs and increase shareholder return through buybacks.

Trading volume at the time of writing surged to 1.9 million shares traded, relative to the 220 thousand shares traded on average over the past 20 days, representing a nearly 9-fold increase. Shares in the company are down 80% from all-time highs, representing the value proposition for savvy investors. Management has also pledged recently to boost free cash flow margins to 20% and to strengthen its partnerships with adjacent companies.

This content is provided for general information purposes only and is not to be taken as investment advice nor as a recommendation for any security, investment strategy or investment account.

This content is provided for general information purposes only and is not to be taken as investment advice nor as a recommendation for any security, investment strategy or investment account.
Share

Read more latest market news

Sharpen your trading and investing skills with our regular deep dives into global financial markets, trends, insights and strategies.

Palantir Has Potential Said One Analyst

Palantir Technologies, a prominent data-analytics firm primarily serving the U.S. government, has significant growth potential according to Wedbush analysts led...

July 18th, 2024 -

About 2 Mins

Nvidia Stock Recovers. All Eyes on Big Tech This Week

Nvidia’s stock saw a positive uptick on Monday after experiencing a sharp decline last week. The company, known for its...

April 22nd, 2024 -

About 2 Mins

Nvidia is Edging Closer to Apple And The Run Isn’t Over Yet

Nvidia’s stock has been on the rise, marking a sixth consecutive day of gains. The company has surpassed Saudi Aramco...

March 7th, 2024 -

About 2 Mins

Sign up for a free demo

Select a platform

Sign up for a free demo

Please confirm that you are over 18 years old to continue

Temporary Slide Menu