Why Wix.com Stock Plummeted in April

April was a generally strong month for U.S. stocks, with the S&P 500 index gaining nearly 10%. As ever, though, a rising market doesn't guarantee a rising share price. One notable outlier during the month was do-it-yourself web design company Wix.com (NASDAQ: WIX), which fell by more than 17%.

Is artificial intelligence a real threat?

Much of the decline was due to a new product rollout from high-profile artificial intelligence (AI) model developer Anthropic. After several weeks of speculation, the company formally announced the rollout of Claude Design. This is an AI-powered product that, in its maker's words, allows users "to create polished visual work like designs, prototypes, slides, one-pagers, and more."

Image source: Getty Images.

That's similar to many of the offerings Wix.com provides to its customers.

Earlier this year, legacy software and other tech stocks came under pressure amid growing fears that AI models could disrupt their businesses. While some of those titles have recovered since then -- not least because of their own AI capabilities -- many investors remain wary of them. The market's reaction indicates that more than a few feel Claude Design is a direct threat to Wix.com.

At the start of April, the company pulled the lever on a piece of financial engineering that, as a whole, investors didn't find beneficial. It repurchased a sizable chunk of its common shares in a modified Dutch auction.

While such an unusual sales method saved Wix.com some capital, it was still costly. According to the company's preliminary digest of the auction, it spent more than $1.6 billion to buy back a bit over 17.5 million of those shares. That was nearly 30% of the total outstanding. .

For a business that has never earned more than $2 billion in annual revenue and had under $1.2 billion in cash and short-term investments at the end of 2025, that's quite a considerable spend.

Finally, throughout the month, analysts tracking Wix.com became notably more bearish on its future. Several cut their price targets on the stock, with two going so far as to downgrade their recommendations. This pair was UBS's Chris Zhang and Citizens' Andrew Boone, both of whom moved their ratings down one peg from the equivalent of buy to neutral.

A vulnerable company

Wix.com provides the tools for non-designers to quickly whip up websites and other digital assets (or modify existing ones, as the case may be). That kind of business model is always subject to disruption by entities that can do the work faster, more effectively, or cheaper, or a combination of all three.

If Claude Design doesn't end up being a "Wix.com killer," I think another app or business will come along to be a disruptor. I consider Wix.com to be vulnerable, and as such, I wouldn't be a buyer of its stock.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Wix.com. The Motley Fool has a disclosure policy.