CM #6: Wix.com is an AI winner??
Yes, the website maker
Wix.com hasn’t had the easiest year, down almost 40% YTD. Investors have dumped Wix on AI fears, believing vibe-coding platforms like the $1.8B valued Lovable have made the drag and drop website builder outdated.
At the same time, Wix quietly made one of 2025’s best acquisitions. It bought Base44, an AI website builder for $80M in June. Base44 is already on track for $50M ARR and catching up to lovable in search trends. Wix has not seen revenue deceleration and is a rule of 40 company trading below 4x NTM sales.
The “Vibe-Coding” threat
The reason Wix is down 40% YTD is investors believe vibe-coding platforms such as Lovable are disrupting Wix’s business model. These platforms allow individuals to create a website in minutes just by entering a prompt.
As a demo, Lovable is impressive. I asked Lovable to design a website for a gym called “elite gym” and Lovable created a professional website in under a minute..
Founded only 8 months ago, Lovable is already valued at $1.8B, a quarter of Wix’s MC.
As put bluntly by an analyst on the Q2 earning’s call: “I guess, if you look at the share performance, the investors would seem to view that vibe coding replaces Wix, not create a new market and complementary. And for example, our agencies using this with Wix Studios or replace Wix studio. I just want to understand how you envision the ecosystem evolving.”
Wix’s CEO and founder, Avishai Abrahami responded: “Well, I think it's complementary, right? […] for websites, it's very hard just with a text interface to move things around and design them the way you want them. We can see already the tools that do vibe coding already starting to add a very weak visual editing elements. So obviously, the solution in the future will be a combination. I think the vibe coding has tremendous potential when it comes to building applications. So that way I think it's very interesting because a lot of the business logic is extremely hard, and that's where vibe coding shines […] vibe coding allows you to start very quickly and switch between designs […] and to build the logic of the applications. For website it’s a bit different. It’s very hard to prompt a full blown e-commerce package.”
While my Elite Gym site looks nice, it’s more of a shell. For getting the website to full functionality, including adding content libraries, payments and scheduling, I need to connect to a platform called Supabase, which uses PostegreSQL for API connections. This is all a bit too complicated for amateurs, but it is still a threat to the Wix studio product.
Wix’s response: the Base44 acquisition
In June, Wix acquired a AI website-building platform called Base44 for $80 million. While Base 44 only had $3M revenue at the time of acquisition, it has since gained considerable search momentum against Lovable.
In fact, Base44 is on track to hit $50M in ARR by the end of 2025. That means Wix got it for less than 2x ARR which is a bargain in today’s AI startup landscape.
As Base44 uses the same APIs, it’s not a surprise that the output is similar to Lovable.
Neither of these platforms have a huge technical moat as they are mainly AI wrappers. They will structure your prompt and send it to OpenAI or Anthropic. Once again, the website is a shell that needs to be connected to other services for payments, scheduling and so on.
However, Wix has a distribution advantage through its millions of existing customers along with a technical advantage as Wix has already built many of the other required services in-house.
These types of add-ons have been a key driver of Wix’s economics in the past few years. Much of Wix’s real margin comes not from website creation itself but with other services relating to business needs. This is a lane where they compete with Shopify.
You can set up an e-commerce business on Wix and Wix will handle payment, SEO, shipping etc. Or if you are a gym or makeup consultancy, you can get a website template along with scheduling clients and handling recurring payments. These mini-SMB platforms have helped drive Wix’s increasing revenue at the cohort level.
These services continue to remain in demand as websites have become complimentary with social media. Customers may discover a business through Instagram but they still want to pay on a website. Businesses don’t want to accept payments through instagram as a. it’s not professional and b. there’s quickbooks integration and other things you need to run a business competently. Wix continues to expand its functionality here, including a unified experience with PayPal and checking products.
It’s easy to imagine how in the vibe-coding model, Wix could leverage native connections to its own services including Wix pay and sell-them as add-ons to make the sites usable, continuing to drive high-margin revenue.
Wix is cheap, relatively speaking
If the 40% drop was not enough evidence Wix is on sale, a comparison to other SAAS peers makes it clear. Wix trades at below 4x NTM sales with 13% revenue growth expected next year. Unlike some of the other peers in its neighborhood, WIX has positive FCF and makes GAAP profit:
When narrowed to the set of SaaS companies with positive FCF, you can see Wix trades at one of the lowest FCF multiples of any SaaS company:
The underlying business remains strong
One may assume based on increased AI competition, that revenue growth is decelerating. That’s not the case…
What about earnings, maybe Wix keeps missing earnings? Nope. They’ve beaten top-line and bottom line four of the last 5 quarters, with the latest quarter being a 30% EPS beat.
In fact, Wix is trending above its rule of 40 guidance given three years ago:
In case you were wondering, this is not a “fake” rule of 40 metric from management. By Altimeter’s scoring, Wix.com had a 29% LTM FCF margin + 13% rev growth for a rule of 42.
Why Wix’s moat survives the AI era
Investors may be conceiving Wix’s moat is in drag-and-drop website building but that conception is a decade behind.
Yes, Wix and Squarespace’s initial promise was to be an out-of-the box tool for an individuals to create a websites without developers, but their real advantage is in the ongoing maintenance.
When one drags and drops an element onto a Wix page, Wix turns it to HTML on the back-end. Given the website-builder needed to be simple enough for a small-business owner with no coding experience to use, Wix intentionally limited the amount of features available within its HTML sandbox.
What Wix discovered by surprise was several SMB owners started hiring agencies to a build a website within Wix instead using HTML. Initially Wix was confused for the behavior: why would a business pay someone to make a website using Wix?
As it turns out, business owners hated having to go back to developers every time they wanted to tweak the structure or change the design of the website. When built on Wix instead, business owners could make updates on their own. Wix realized this was a sizable market and released Wix Studio in 2023, targeted for website agencies.
While being similar the same Wix platform in the front-end, Wix opened up the sandbox for developers to add custom visual, HTML, and metadata elements.
This agency segment which Wix calls “partners” is growing faster than Wix as a whole, with Q2 revenue up 24% YoY.
Like with developer created HTML sites, tweaking a vibe-coded site can also be a nightmare for SMBs. Integration with Wix’s existing tools is essential to make these AI sites malleable.
The truth is Wix has never had full product market fit: their products are too simple (regular Wix) or too complex (Wix Studio). Wix has never had a website creator that’s fully functionality and easy to use. Could platforms like base44 fill this gap?
While it’s still possible for Wix to be disrupted, Wix is adapting to the vibe-coding game faster than Lovable is adapting to the problems Wix has already solved. Wix already has payments, billing, e-commerce, and scheduling. Vibe coding technically is the easiest piece, requiring only basic API calls.
Wix is valued on a NTM 3.1x sales multiple compared to the median SaaS’s 4.7x and 11x FCF compared to the median SaaS 27x. If Base44 continues to show momentum and drive incremental revenue growth, Wix could re-rate to $200 a share driven by a fast-growing AI asset and decreased AI disruption risk.