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Why Wix Stock has climbed more than 10% this week

By on July 23, 2021 0

What happened

Actions of (NASDAQ: WIX) rose more than 10% this week after a large rise in tech stocks and bullish sentiment from a Wall Street analyst. At 2:32 p.m. EDT, the stock was up 10.3% for the week on Friday.

So what

This week, Morgan Stanley analysts launched an overweight (which means buy) on stock, with a price target of $ 339 per share. Wix is ​​currently trading at around $ 305 per share. With no significant news from the company, this improved price target was likely a major reason for the stock’s movement over the past few days.

Image source: Getty Images.

Another reason investors bought Wix shares was the bullish data that came out on Shopify (NYSE: SHOP), one of Wix’s e-commerce competitors. Third-party data from RBC Capital Markets revealed that Shopify merchants grew 39% year-over-year in the second quarter, an acceleration from growth in the first quarter. Given that Wix offers e-commerce products similar to Shopify, investors can assume that Wix will see strong growth this quarter as well.

Now what

With recent moves, Wix stock is now trading at a sliding price / sell ratio (P / S) ratio of 15.7 and has little history of profitability. Given this high valuation, investors should expect strong growth from Wix over the next several years if the stock is to generate positive returns for shareholders. If that doesn’t happen, the stock is likely to be a big loser for the wider market over the next decade.

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Brett schafer owns shares of The Motley Fool owns stock and recommends Shopify and The Motley Fool recommends the following options: $ 1,140 long calls in January 2023 on Shopify and $ 1,160 short calls in January 2023 on Shopify. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.