Why Wix.com Stock Dove by 16% Today

Wix.com (NASDAQ: WIX) didn't come close to surmounting the hump of hump day. Following its release on Wednesday of quarterly results that disappointed many market players, the DIY website creation specialist's stock price fell by a queasy 16%. Although it was a gloomy day for stocks in general, it wasn't that gloomy -- the S&P 500 index closed the session down just 1.6%.

A mixed first quarter

In the first quarter, Wix.com booked $474 million in revenue, which was 13% higher on a year-over-year basis. That was on the back of a 12% rise in total bookings, a critical metric for the company, to $511 million. Non-GAAP (adjusted) net income also rose, advancing to just under $94 million ($1.55 per share) from the prior-year period's $77.3 million.

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The revenue figure landed above Wall Street's consensus expectations, albeit not spectacularly. On average, analysts tracking Wix.com stock were modeling for $472 million on the top line. However, they were also anticipating the company would post $1.63 per share in adjusted net income.

In its earnings release, Wix.com attributed its gains to a variety of factors. These include its artificial intelligence (AI) capabilities assisting website creators, and the popularity of its Wix Studio professional-level design platform.

Mr. Market's punishment

Although Wix.com maintained that its first-quarter performance topped its own expectations, it left its full-year guidance unchanged. It expects bookings for 2025 to land in the $2.025 billion to $2.06 billion range, representing growth of at least 11% over the 2024 result. This should shake out to revenue of $1.97 billion to $2 billion. The low end of that range would amount to 12% growth.

Finally, Wix.com is expected to produce free cash flow of $590 million to $610 million. The company did not provide a net income forecast.

While it's understandable that investors were concerned with the combination of trailing growth and stagnant guidance, I don't think the company is doing badly at all. The market's reaction feels overblown to me, and perhaps warrants a reassessment of this stock.

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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.