Why Wix.com Ltd. Stock Slipped 11% Last Month

MarketsMotley Fool

What happened

Shares of Wix.com Ltd. (NASDAQ: WIX) dipped 11% in July according to data from S&P Global Market Intelligence.

Continue Reading Below

Shares of the internet-hosting company slid after it posted a disappointing second-quarter earnings report. As the chart below shows, the stock had risen fairly steadily in July before those gains were more than wiped out in response to that report.

So what

The website management company posted 51% revenue growth to $103.5 million, which beat the company's own guidance range of $101 million to $102 million. However, earnings per share came up short. Adjusted EPS improved from a loss of $0.09 a share a year ago to breakeven, but analysts' consensus expectation had been for a profit of $0.09 a share.

Still, CEO Avishai Abrahami said it was a "strong quarter," adding: "With the addition of Wix Code, we now have a product targeted specifically to creators, designers and developers. This is a remarkable product that significantly expands our addressable market to those who want to build complex web applications that can be tailored for any business need."

Wix Code, released earlier in the month, allows for the "easy creation of web applications with custom business logic and a stunning user interface."

Now what

While an earnings miss can send a stock tumbling, Wix's blowout performance earlier in the year may offer a better explanation for the pullback. Before the report came out, the stock was up over 70% year-to-date, on a rally thanks to two strong earlier reports.

Given this company's solid top-line growth and expanding portfolio of products, I wouldn't be too concerned about the stock's decline last month. Wix reaffirmed its guidance for the year, including its outlook for45% to 46% growth and free cash flow nearly doubling. The company remains on the right track.

10 stocks we like better than Wix.comWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Wix.com wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 1, 2017

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.