Starboard Value LP has amassed a 9% stake in website development platform Wix.com Ltd (WIX.O), the activist hedge fund revealed in a regulatory filing on Friday. Starboard had been amassing the stake, and spoke to Wix about how it can boost operations, Reuters reported earlier in the day, citing sources with knowledge of the matter.
Wix has been battling with losses since the last quarter of 2021 amid a slump in e-commerce caused by runaway inflation and people making fewer online purchases owing to the COVID-19 pandemic. It has adopted a three-year cost-cutting program in a bid to increase its ailing stock price.
Starboard backs Wix’s bid to become profitable and thinks the company has a huge opportunity to grow its margins and expand further, sources said. The fund has been looking at its ideas with Wix’s management and does not want board seats now, the sources added. Details of Starboard’s suggestions to Wix could not be determined.
The sources asked not to be named because the matter is confidential. Starboard and Wix did not promptly respond to requests for comment.
Wix, an Israel-based company whose stock is listed in the U.S., has a market value of about $4.4 billion. Its shares have shed 54% of their value in 2022 on concerns about clients not paying enough for its products. The company registered a loss for the three months to the end of June of $111.2 million, versus a $37.6 million profit in the same period last year.
Wix, had 222 million registered users across the world using its website development tools, most of them free, as of the end of December. Out of those, only 6 million were premium subscribers. Wix has declared cost slashes it expects will save $150 million every year and improve its profit margins. The company also allowed a $500-million share buyback program.
Starboard, which is chaired by Jeff Smith, is one of the industry’s most popular activist investors and is extensively known for its operational expertise. It is also an investor in another website development services company, GoDaddy Inc (GDDY.N), where it built a stake in 2021.