What is WIX's Intrinsic value?

Wix.Com Ltd (WIX) Intrinsic Value Analysis

Executive Summary

As of July 16, 2025, Wix.Com Ltd's estimated intrinsic value ranges from $77.64 to $139.96 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $139.96 -4.7%
Discounted Cash Flow (5Y) $97.83 -33.4%
Dividend Discount Model (Multi-Stage) $100.29 -31.7%
Dividend Discount Model (Stable) $77.64 -47.1%

Is Wix.Com Ltd (WIX) undervalued or overvalued?

With the current market price at $146.83, the stock appears to be significantly overvalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Wix.Com Ltd's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.66 0.77
Cost of equity 6.9% 9.2%
Cost of debt 5.0% 5.0%
Tax rate 9.6% 10.9%
Debt/Equity ratio 0.07 0.07
After-tax WACC 6.8% 8.9%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 7.8% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $1,761 (FY12-2024) to $4,055 (FY12-2034)
  • Net profit margin expansion from 8% to 15%
  • Capital expenditures maintained at approximately 3% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $98 $5,367M 85.5%
10-Year Growth $140 $7,712M 74.9%
5-Year EBITDA $69 $3,752M 79.3%
10-Year EBITDA $100 $5,496M 64.7%

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 8.0%
  • Long-term growth rate: 4.0%
  • Fair value: $100.29 (-31.7% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 9.2% (Low) to 6.9% (High)
  • Long-term growth rate: 3.0% (Low) to 5.0% (High)
  • Fair value range: $30 to $125
  • Selected fair value: $77.64 (-47.1% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $8174M
Enterprise Value $8094M
Trailing P/E 55.20
Forward P/E 44.62
Trailing EV/EBITDA 11.90
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.07

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 33% $41.99
Discounted Cash Flow (5Y) 28% $24.46
Dividend Discount Model (Multi-Stage) 22% $20.06
Dividend Discount Model (Stable) 17% $11.65
Weighted Average 100% $109.06

Investment Conclusion

Based on our comprehensive valuation analysis, Wix.Com Ltd's intrinsic value is $109.06, which is approximately 25.7% below the current market price of $146.83.

Key investment considerations:

  • Strong projected earnings growth (8% to 15% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.07)

Given these factors, we believe Wix.Com Ltd is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.