Wix.com Ltd. (WIX)

By both methods, the value today (DCF $212 · Multiples $193) exceeds the market price ($77).

Today — with margin of safety: at $77 trades ~60.1% below its value discounted to today (~$193) — the wide discount we require (≥38%, equivalent to a ~15% annual return); the risk is covered by the margin, not the rate.

At 5 years — Muy infravalorado: the target price ($240) plus dividends yield above the required average return (10%) — the business compounds.

The bridge: the return at 5 years comfortably exceeds the risk-free rate (4.5%) — and the discount reaches the required margin of safety.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($77) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The market discounts less growth (-1.1%/year) than we project (20.0%/year) → if the base case holds, there is margin: perception is more pessimistic than the estimated reality.

That growth implies ~$0.2 bn of owner earnings in year 5 (vs ~$0.5 bn of our base case). It recalculates if the DCF assumptions are edited.

Year-by-year projection of the selected scenario. From each year, two versions of the flow are derived: growth FCF (operating flow − total capex, the cash surplus) and maintenance FCF (the owner earnings: what the business yields if it only sustains its capacity). The flow is returned almost in full (dividend + buyback) or redeployed into the operation, so that EV stays roughly flat and multiples compress because the metric grows, not because of cash accumulation. The valuation is done on FCF de mantenimiento neto de SBC. In edit mode, revenue, margins, capex, and exit multiples can be adjusted.

Year 0 = TTM as of June 30, 2026 built by levels: the 6-K of August 4, 2026 does not carry XBRL, so each line is computed as fiscal year 2025 from the 20-F + six months of 2026 − six months of 2025 from the release. Revenue US$1,993.0M + 1,104.2M − 963.6M = US$2,133.7M; GAAP operating income US$1.8M − 128.5M − 81.7M = −US$208.5M; operating cash flow US$582.9M + 134.1M − 295.8M = US$421.1M; stock-based compensation US$237.4M + 110.3M − 119.7M = US$228.0M. Capex does not come from the XBRL (the PaymentsToAcquirePropertyPlantAndEquipment tag was abandoned in 2020): it is taken from the cash flow statement and the free cash flow reconciliation, US$9.9M + 6.5M − 5.7M = US$10.7M. Year 0 cannot be fiscal year 2025 because in early April 2026 the company settled a modified Dutch auction tender offer for 17,577,250 shares at US$92.00 (~US$1,617M, ~29.7% of the share capital), funded with cash, sale of marketable securities and US$500M of a bank credit facility; the live price already corresponds to the company after the offer. Metric: maintenance flow net of stock-based compensation (§3): ocfMargin is operating cash flow minus that compensation (TTM 9.05% = 421.1 − 228.0 over 2,133.7), unnormalized; it mixes cash payments for acquisition costs (US$37.3M) and restructuring (US$8.5M) from the first half of 2026 and, in the opposite direction, the accrual of Base44 retentions not yet paid. Stock-based compensation path implied in the base case: 10.7% of revenue in the TTM, ~10% in year 1 and ~9% in year 5; in the adverse scenario it does not compress. Current guidance (6-K of August 4, 2026): 2026 revenue growing in the low-to-mid part of the 10% to 19% range, third-quarter growth in the low double digits, and free cash flow margin excluding acquisition and restructuring costs in the high part of the 10% to 19% range, with Base44's gross margin moving to ~60% in the second half. The base case's year 1 (+12%) sits slightly below the trajectory (12.5% · 12.7% · 13.2%) because of that third-quarter guidance. Maintenance capex = 50% of total capex, which is lower than depreciation and amortization (US$32.5M TTM). Bridge as of June 30, 2026: cash, short-term deposits and marketable securities US$960.8M; debt = 0% convertible notes due 2030 (US$1,128.3M carrying value) + bank credit facility (US$500.1M). The convertibles are subtracted in full and their shares do not go into the denominator; the credit agreement requires maintaining deposits of ~1,000 million shekels in Bank of Israel bills and US$120M in cash at the lending bank. Shares: 42.965M = basic weighted average for the second quarter of 2026; it includes days before the tender offer payment (which expired April 1, 2026 and settled within the April-June 2026 quarter), so it is an average contaminated by the prior count and higher than the period-end count. The release does not disclose the share count outstanding as of June 30, 2026; with a loss, diluted equals basic and excludes outstanding options and RSUs. Future buybacks are modeled at the net rate sustained before the offer, −0.6% annually (average diluted shares 58.40M in 2023 versus 57.72M in 2025), the same across all three scenarios; the offer is not extrapolated because it was partly funded with debt. Buybacks over the last twelve months = US$1,898.4M: the recurring program (US$275.0M = US$575.0M for fiscal year 2025 − US$300.0M for the first half of 2025) plus the tender offer (US$1,623.4M from the 6-K's cash flow statement), against TTM free cash flow of US$410.5M. With that actual payout the cascade's retention is zero, so the model does not accumulate cash: the future cash flow that does not go to the recurring buyback — presumably to repaying the US$500M credit facility — is not credited as cash and remains as upside margin, not as paid value. 12% tax rate: the preferred technology-company rate that the 20-F states applies to its technology income in Israel; the effective book rate for fiscal year 2025 (≈ −4,690%: a benefit of US$51.0M on pre-tax income of US$1.1M) is not the rate for the business. On June 8, 2026 the company announced a reorganization (a ~20% headcount reduction, ~1,000 employees) due to the slowdown in Partners, with an estimated recurring annual saving of ~US$150M and restructuring charges of US$30-35M; the base case's cash margin path converges to the same ~15% in year 5 with or without that saving, within the projection's margin of error.

Today's elevated multiple is the price of growth: if the business grows, the entry point cheapens on its own going forward (the metric grows while EV stays roughly flat). The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—, so the value curve shows whether value creation is concentrated in the early or the later years. The required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $240 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $77, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $240 in 5 years and a required return of 4.5% annually, the maximum to pay today is $193. Against the current market price ($77), the margin of safety is 60.1% (trades below the maximum → there is margin) and the total return at that price would be 25.6% annually.

• Base case return. +26% annually over 5 years (Very undervalued).
• Entry multiple. 21× today and 8× in 5 years on the maintenance flow net of stock-based compensation.
• Adverse scenario. +26% annually if the cash margin stays at 9% and growth fades.

Each margin over sales, year by year: historical (solid line) → projection (dotted).

• ✕ ROIC exceeds the cost of capital (~10%)
• ✕ CFROIC backs up the ROIC (0%, cash vs. accruals)
• ✓ Healthy balance sheet (low corporate debt)
• ✓ Durable competitive moat (multiple advantages)

• Return on capital. Negative on an accounting basis over the trailing twelve months due to acquisition and restructuring expenses; negative invested capital due to deferred-revenue funding.
• Cash conversion. Operating cash flow well exceeds accounting income because of prepayment and the accrual of unpaid expenses.
• Stock-based compensation. 10.7% of revenue over the trailing twelve months; expensed in the metric.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

Driver: registered users × conversion to premium subscription × revenue per subscription, plus business solutions sales per user. In 2025 the number of subscriptions fell 1% while Creative Subscriptions ARR rose 13%: growth comes from revenue per subscription (higher-value users, the 2024 price increase and agency plans), not from volume. Business Solutions grows through payments and service resale.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (30-jun-2026): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Sustained growth. 12.5% · 12.7% · 13.2% over the last three fiscal years and +15% in the second quarter of 2026.
• Subscription volume. Premium subscriptions fell 1% in 2025: growth depends on revenue per subscription.
• Base44. Growth engine in the second quarter of 2026, with gross margin still recovering.

• Contractual recurrence. 83% of premium subscriptions are annual or multi-year, prepaid and auto-renewing.
• Capital-light. Capex of $10.7M over the trailing twelve months, 0.5% of revenue.
• Substitution risk. The 20-F warns that AI systems could eliminate the need for one's own website presence.

Not all debt is equal: only the structural needs refinancing; the rest is operational (self-liquidating).

Structural debt is what is exposed to the contraction phase of the cycle; operational debt (leases, matched funding) self-liquidates with the business.

• ✕Leverage (net debt / EBITDA)Net debt $0.7 bn (EBITDA ≤ 0)
• ✕Interest coverage (EBIT / interest)EBIT ≤ 0 vs interest $0 bn
• ✕Liquidity (current ratio)0.61×
• –Cash quality (CFROIC vs ROIC)ROIC ≤ 0 (see value creation)
• ✕Value creation (ROIC − 10% bar)-77pp
• ✓Malinvestment test (capex vs incremental ROIC)Capex/D&A 0.3x — no over-investment
• ✓Float / working capitalFrees up cash $0.3 bn (float / negative WC)
• !Dilution (SBC % of revenue + shares)SBC 10.7% of revenue

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

• Net debt. $1,628.4M of debt against $960.8M of cash and securities as of June 30, 2026.
• Credit covenants. Bank debt to free cash flow ≤2.0× and mandatory deposits.
• Equity. Negative (−$1,740.9M) due to the buyback; not a reflection of an operating loss.

Who owns the shares — the alignment and whether there is a controlling shareholder.

• Founder at the helm. Avishai Abrahami, co-founder, is chief executive officer.
• Debt-funded buybacks. The $1,617M tender at $92.00 was funded in part with a $500M credit facility.
• Three-year plan achieved. The company states it generated close to $600M of free cash flow in 2025, above the ~$500M target of the three-year plan presented in August 2023 ($573.0M per the 20-F reconciliation).

• Fear of substitution by generative AI: the market extrapolates that natural-language assistants and development tools make a website builder unnecessary, and the stock trades well below its 52-week high.
• Motivated sellers from the June 8, 2026 guidance cut: the company lowered 2026 revenue growth to the low-to-mid part of the 10%-19% range and bookings to "low-teens," due to a sharper-than-expected slowdown in Partners and a reorganization cutting ~20% of headcount (~1,000 employees); free cash flow margin guidance excluding acquisition and restructuring costs was kept at the high end of the 10%-19% range (~$420M), and the second quarter closed with a GAAP loss of $76.4M.
• Cash flow depressed by voluntary growth investment: Base44's compute cost and marketing spend (including the Super Bowl campaign) are discretionary spending that the company states it is reinvesting against a return threshold.
• Transformed balance sheet: the buyback tender left negative equity of $1,740.9M and $1,628M in debt, which deters investors who screen on accounting leverage.

The discrepancy between perception and reality is the source of the opportunity: the market reads the margin compression as structural deterioration, while second-quarter 2026 revenue (+15%) and ARR (+15%) are above the historical 12.5%-13.2% band — driven in part by Base44, acquired in June 2025 and still without a comparable base — and the company anticipates Base44's adjusted (non-GAAP) gross margin moving from near zero to ~60% in the second half. The company itself bought back ~29.7% of its capital at $92.00 in April 2026. Classification: missing buyers due to cash flow depressed by voluntary investment, plus motivated sellers from the June 2026 guidance cut.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at ~0%/year (-2% total): the margin of safety protects the downside. The bull (+39%/year, +412% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• Generative AI. Product substitution by assistants and natural-language development tools.
• Base44 profitability. Substantial compute costs that may not come down in time.
• Geopolitics. R&D operations in Israel and contractors in Ukraine.
• Foreign exchange. A 10% appreciation of the shekel would have reduced 2025 net income by ~US$53.4M.

Each thinker's analytical framework applied to our data.

• Buffett / Graham Quality + margin of safety

  Fails the quality gate: ROIC -67% does not clear the 10% bar.

• Peter Lynch Growth at a reasonable price (GARP)

  A hyper-growth growing 20% at a multiple/growth of 1.1 → cheap for its growth.

• Joel Greenblatt Cheap and high-return (Magic Formula)

  ROIC -67%; earnings yield not computable (EBIT or EV not positive).

• Howard Marks Perception vs reality + cycle

  The price discounts -1% vs our 20%: perception is more pessimistic than reality, with an identified source of the discount.

• Seth Klarman Capital protection (bear scenario)

  Bear-scenario floor -0%/yr, bull-scenario ceiling +39%/yr over 5y and a +60% margin → capital protected, asymmetry in your favor.

• Pat Dorsey Moat strength (Five Rules)

  A narrow moat, stable; sources: switching costs, network effects, efficient scale, intangibles → partially passes the Five Rules.

• Aswath Damodaran Expectations implied by the price

  Justifying the price requires discounting -1%, within what we project (20%) — the story squares with the numbers.