New York-based investment adviser, Starboard Value LP, has built a 9% stake in the website development platform Wix.com Ltd. Following this, Wix shares are surging by almost 15%. Wix is a website building platform that has a complete set of solutions and powerful tools to design and manage a website, enabling anyone to create and grow online.
Wix has been struggling to make money since the fourth quarter of 2021. This is because there has been a slowdown in e-commerce due to rampant inflation and people making fewer purchases online because of the COVID-19 pandemic. To try and improve its stock price, Wix has adopted a three-year cost-cutting program.
Starboard invests in undervalued companies that are not performing well. It enables these companies to identify and unlock opportunities to improve, so that the shareholders, or people who own the company, can benefit. Starboard has been in talks with Wix about how it can improve its operations.
Wix is an Israel-based company with stocks listed in the United States. Its market value is roughly $4.4 billion. Wix lost 54% of its value this year on concerns that clients are not paying enough for its products. It made a loss of $111.2 million in the three months to the end of June, compared to a $37.6 million profit in the corresponding period in 2021.
There has been a positive impact on Wix stock price after Starboard acquired a stake of 9% in the company on Friday. On Monday, Wix’s share price, which had previously closed at $73.69 opened to $77.95 and showed an increase of about 15% reaching $85.56.
Starboard supports Wix’s goal to become profitable. It also believes that Wix has a lot of opportunities to improve its profits and grow even more. Starboard has been talking with Wix’s management about these things, but they are not interested in any board seats at this time.