Key insights
- Bank of America downgraded Wix.com to "Underperform" from "Buy," citing slowing growth in its Partners business, competition from AI coding tools, and concerns over increased marketing spending impacting profitability. Despite strong performance in its AI platform, the brokerage believes AI development platforms could weigh on Wix's core website-building business. The price target was also reduced, reflecting lower growth and EBITDA forecasts.
Investing.com -- Bank of America downgraded Wix.com to Underperform from Buy, citing slowing growth in its Partners business, rising competition from artificial intelligence coding tools and concerns that increased marketing spending could limit profitability, despite strong expansion in its AI-powered Base44 platform.
The brokerage also cut its price target to $68 from $75, representing a 9% reduction, arguing that intensifying competition from AI development platforms such as Lovable and Cursor could weigh on Wix's core website-building business, particularly among agency partners.
Wix reported third-quarter revenue of $570.2 million, up 13% year over year and above analyst expectations of $566.1 million. Bookings reached $573 million, rising 11% and also exceeding consensus estimates. However, revenue from its Partners segment increased 11% to $212.4 million, missing expectations of $214.1 million and slowing by six percentage points from the previous quarter.
Bank of America analyst Michael McGovern said rapid growth at Base44 was masking weaker underlying performance in Wix's core business. Base44's annual recurring revenue approached $250 million, but the brokerage estimated that core Wix ARR growth could be as low as 3% to 4%.
The brokerage also highlighted rising sales and marketing expenses, which reached $193 million, approximately 5% above consensus. Adjusted operating income came in at $68.7 million, below the $74 million analyst estimate.
For the fourth quarter, Wix expects revenue growth in the low double digits, while Bank of America lowered its growth forecast to 12% from 14%. It also reduced its forecast for adjusted EBITDA margin to 15% from 18%.
For 2027, the brokerage cut its revenue estimate to $2.52 billion from $2.56 billion and EBITDA forecast to $370 million from $438 million, citing slowing core growth and sustained competitive pressures.
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