Wix now Israel's second most valuable company as retail shifts online

The coronavirus lockdown saw retailers scramble to open online stores, benefiting the tech company.

AUGUST 11, 2020 15:32

Israeli-based Wix is expanding its large R&D office in Vilnius, Lithuania. (photo credit: MAX SCHINDLER) — Israeli-based Wix is expanding its large R&D office in Vilnius, Lithuania.

(photo credit: MAX SCHINDLER)

Israeli tech company Wix has emerged as an unlikely beneficiary of the coronavirus lockdown, storming to a 260% share price increase since March to become Israel’s second most valuable company in market capitalization terms.

With the lockdown forcing the closure of retail outlets, many business owners turned to selling their products online in order to keep revenue flowing, and it has been this boom in online sales portals that has seen Wix catapulted up the valuations tables.

“The trends that began in late March continued throughout the second quarter, driving record-setting results,”Wix co-founder and CEO Avishai Abrahami said, according to Globes.

“The need for business owners to move online quickly, communicate with customers, and deliver goods and services has never been more imminent, and the Wix platform continues to provide millions of users with the ability to thrive during these unprecedented times,” he added.

Wix, which now has a market capitalization value – that is, the total value of all the company’s shares of stock – of $15.8 billion on the Nasdaq, specializes in offering easy-to-use website building tools for small businesses. The company had already seen a boost to its valuation following the launch in late 2018 of the option to clear payments for purchases made on clients’ websites.

The company now plans to build upon this success and the boon lent it by the lockdown to offer further capabilities to its clients.

“Our focus remains on the success of our users, and we continue to deliver innovative products and technology, marked this quarter by the public launch of Editor X and our expanded eCommerce offering,” Abrahami said.

Wix offers a free package allowing users to set up a basic website, but extra features such as a shopping cart, personalized web address and traffic analysis are included in subscription packages priced at various levels. According to Haaretz, during the second quarter of 2020, the company added a record 9.3 million users, including 346,000 premium subscribers, up 17% on last year’s figure.

“We’ve made a leap from being a consumer product for a particular group to a necessity for many more people. It’s the way many people today are making a living, by selling online,” CEO Nir Zohar said.

As retailers become more reliant on online business sales, their requirements in the field are only set to grow. Wix plans to step in by offering more services, developing alongside the needs of its customers.

“It all has become more and more complex. The coronavirus is accelerating this movement, and the potential is enormous. This applies to any business, big or small. We make all this accessible to our smallest customers in an easy, simple and inexpensive way,” Zohar explained.

Intriguingly, the company has achieved its stellar valuation despite never having turned a profit. Wix recently reported a second-quarter loss of 26 cents per share, even as it recorded a 27% growth in revenue to $236m., due to its marketing spend to meet the demands of new customers.

The company has also hired 600 more staff since the beginning of the pandemic, including 240 in Israel.

According to Calcalist Tech, Wix reported earnings of $761 million in 2019, with business-focussed revenue exceeding $100 million.

This year, they posted first quarter revenues of $40 million, more than double last year’s rate in the same quarter.

Calcalist has compared the success of the company to that of Zoom, the online conferencing platform, which has also seen a strong boost in its valuation throughout the coronavirus lockdown. However, as Wix was passing the $10 billion valuation mark in mid-June, Zoom, an American company had already reached a valuation of $68b. Calcalist puts the significant difference in valuation down to two factors: firstly, Zoom has entered the modern lexicon as a verb, and secondly, it has already turned a profit.