Why Wix Could Be A Major Threat To Amazon

Since the company IPO'd late in 2013, website development platform Wix.Com Ltd WIX has more than tripled in value. Despite the impressive trajectory of Wix so far, Sean Emory, founder and chief investment officer of the investment firm Avory and Company, believes Wix is still vastly undervalued in the market.

Emory appeared on Wednesday's edition of Benzinga's PreMarket Prep morning show to explain the factors he thinks make the young startup a bargain and potentially a rival to Amazon.com, Inc. AMZN in the e-commerce market.

How Wix Is Making Money

Wix's stellar Q4 earnings report showed it beat revenue estimates by more than $2.5 million, boosting the stock to an all-time high. As of writing, the stock was trading at $63.25.

Wix also revealed in the report that it had surpassed the 100 million user milestone.

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Emory indicated that the benchmarks of Wix's success lie in the company's fundamental structure and ability to convert non-paying customers into paying customers.

"They've turned free users into paid users while really seeing improvements in their revenue per user," he said. "It’s a great story. They've gone literally from $700 million to $2.3 billion [in revenue]. In terms of where we see this going, they have 100 million users. All the data they are collecting through these users I think is something that all companies are looking for."

Emory, who purchased shares in Wix several months after its IPO, remains bullish in the near term due to these fundamentals.

The Next Step

Emory anticipates Wix will be able to utilize its growing user base, as well as the information garnered from those customers, and parlay it into broader digital services, particularly in the e-commerce market. "They're looking for how e-commerce businesses, how users online are interacting with one another [and] different types of factors that they could use into potentially creating some sort of Amazon platform."

While the idea of the $2.6 billion market cap Wix attempting to rival the $400 billion market cap Amazon in online retail might seem like an impossible feat, Emory is convinced the thriving startup has the resources to make a run at the market.

"They have 600,000 e-commerce companies using their platform," he said. "So why not just try and bulk it all together and turn it into some dynamic Amazon-, Etsy Inc ETSY-type of business?"

According to Emory, the foundations are set for Wix to continue its current rally in both user count and share price. Whether that translates into Wix becoming the next big tech stock is yet to be seen.

You can listen to the full interview with Emory at 34:35 in the clip below.

Listen to PreMarket Prep and chat LIVE with our hosts, guests, and other listeners every weekday morning from 8–9 ET! Image Credit: By דוד שי - Own work, CC BY-SA 3.0, via Wikimedia Commons