Wix stock has become a bargain amid SaaSpocalypse fears as earnings loom

Wix NASDAQ:WIX stock has come under intense pressure this year as investors grew concerned that the rise of AI-powered "vibe coding" could disrupt its website-building business. After peaking at $246 in January last year, the stock has tumbled 77% to around $55. Against this backdrop, the company will need to reassure investors that its growth prospects remain intact when it reports earnings on August 4.

Wix stock under pressure ahead of earnings

Many software companies have tumbled this year amid the ongoing SaaSPocalypse concerns. This includes top companies like Adobe, Workday, ServiceNow, and Figma. 

Wix and other website builders are some of the most exposed companies because of their business models. 

For starters, Wix offers a website builder that makes it possible for people to create quality websites without the need for code.

Today, vibe coding platforms are disrupting this industry by making it easy for people to build applications and websites easily. One just needs to describe the project and the AI tools will do the rest. 

Wix has taken note of this and has moved to the industry. Last year, it bought Base44 in a $80 million deal. It has also launched several AI tools, including Wix Harmony, which combines vibe coding and drag-and-drop features.

The most recent results showed that Wix’s revenue rose by 14% in the last quarter to $541 million. Its bookings jumped by 15% to $585 million, while its transaction revenue rose by 20% to $70 million. Some of this growth was driven by the performance of Base44, which has become a major player in the vibe coding industry.

Wix stock will be in focus this week as it releases its earnings on Tuesday. Analysts predict that its revenue rose by 12% to $552 million in the last quarter. The most optimistic analyst predicts that the revenue will jump to $559 million.

The ongoing AI investments are coming at a big cost for the company. As a result, investors anticipate the earnings-per-share (EPS) to come in at $1.21, much lower than last year’s $2.28. The management hinted of its slowing business in the last earnings report, saying.

“Our outlook accounts for the slower-than-expected start to the year in our Partners business as well as impact from productivity headwinds due to the war in the Middle East, which has pushed out certain important product rollouts for our professional audience.”

These challenges have made Wix to be relatively undervalued, with its forward price-to-earnings ratio falling to 10. This explains why the company debuted its share buyback plan in the last earnings.

However, while this is the case, the company will need to demonstrate strong growth for it to bounce back. I

Wix.com stock technical analysis

Wix stock chart | Source: TradingView

The weekly chart shows that the WIX stock has plunged in the past few months, moving from last year’s high of $246 to the current $55. It moved below $55 in June and reached a low of $40 in June. This price was an important support as it was its lowest level in June last year. 

A closer look shows that it has formed a break-and-retest pattern, a common bearish continuation sign in the market. It also remains below the 50-week and 100-week Exponential Moving Averages (EMA).

Therefore, the stock will likely resume the downtrend, potentially to the next key support level of $40 after earnings.