Shares of Wix.com plunged 27.10% to $55.32 after the website-builder reported a first-quarter print that prompted several prominent brokerages to lower their ratings and targets on the stock.
Analyst reactions and target revisions
Wells Fargo moved its rating to Equal Weight from Overweight and reduced its price target to $54 from $137. RBC Capital Markets described the quarter as "very challenging" and downgraded Wix to Sector Perform from Outperform, cutting its target to $60 from $90. Citi shifted its stance to Neutral from Buy and trimmed its price target to $66 from $105.
Bookings and the Base44 contribution
Total bookings for the quarter were $585 million, up 15% year-on-year and broadly in line with expectations. However, analysts highlighted that much of the underlying strength was attributable to Base44, Wix’s AI app-building acquisition, rather than the company’s established creative subscription business.
Wells Fargo estimated that core creative subscription bookings growth slowed to roughly 2% year-on-year in the first quarter, down from 9% in the fourth quarter, and attributed the deceleration to competition from AI "vibe coding" tools. As Wells Fargo analyst Alec Brondolo wrote, "The end market accelerated, but competitive pressures impacting growth to a greater extent than we expected."
Partner channel struggles and management explanation
A clear area of weakness during the quarter was the partner channel - web design agencies that resell Wix services. Management pointed to execution issues and product delays tied to the Middle East conflict as explanations for partner-channel softness. RBC analysts, including Brad Erickson, noted that "today’s Partner weakness is the clearest signal to date of vibe coding headwinds setting in," suggesting agencies could be facing declining demand for their service offerings as consumer-friendly AI tools proliferate.
Base44 traction versus margin impact
Base44 showed rapid revenue expansion, reaching $150 million in annualized recurring revenue in May, up from $100 million in early March - a growth trajectory analysts described as impressive. At the same time, scaling the Base44 product has required significant marketing spend and AI compute costs, which pressured margins.
Adjusted gross margin declined to 66.2% in the quarter from 68.8% a year earlier, while sales and marketing expense rose 88% year-on-year.
Forecast revisions and financial guidance
Wells Fargo reduced its free cash flow estimates for 2026 and 2027 by 26% and 13%, respectively. Citi trimmed its adjusted EBITDA projections by roughly 35% for 2026 and 30% for 2027. Despite these cuts, Wix maintained its full-year guidance for mid-teens revenue and bookings growth.
Management lowered its free cash flow margin outlook to the high-teens from a prior low-to-mid 20% range, pointing to headwinds stemming from the company’s post-tender capital structure and appreciation of the Israeli shekel.
Citi warned of "structurally lower margins as Base44 likely impacts profitability going forward," while RBC observed that measurable customer lifetime value metrics for Base44 are unlikely to be visible before next year, which, the firm said, leaves the near-term investment case clouded.
Implications for investors and markets
The quarter underscored a tension between rapid top-line expansion tied to an AI-focused acquisition and rising costs that are compressing margins. Analysts across multiple firms have re-rated the stock and lowered near- to medium-term profitability and cash flow expectations in response to the results.
What remains uncertain
While Base44 is accelerating revenue, its long-term profitability impact and customer lifetime value remain to be proven, according to analysts. At the same time, the competitive influence of consumer-oriented AI coding tools on Wix’s core creative subscription business and its partner channel is developing and was cited as a primary driver of the company’s slower core bookings growth in the quarter.