NEW YORK, Sept 16 (Reuters) – Activist hedge fund Starboard Value LP has acquired a roughly 9% stake in Wix.com Ltd (WIX.O) and spoke to the website development platform of the how she can improve her business, people know from the matter discussed on Friday.
Wix has been struggling with losses since the fourth quarter of 2021, as e-commerce slows due to runaway inflation and people shop less online in the wake of the COVID-19 pandemic. It adopted a three-year cost-cutting program to help drive down the stock price.
Starboard supports Wix’s drive to achieve profitability and believes the company has a strong chance to improve margins and grow further, the sources say.
The fund has discussed its ideas with Wix executives and is not currently seeking board positions, the sources add. It was impossible to know the details of Starboard’s suggestion for Wix.
The sources asked to remain anonymous as the matter is confidential. Wix and Starboard did not immediately respond to requests for comment.
Wix, an Israel-based company whose shares are listed in the United States, has a market value of around $4.4 billion. Its stock has lost 54% of its value this year due to concerns that customers are not paying enough for its products. The company reported a loss of $111.2 million for the three months to the end of June, compared to a profit of $37.6 million for the corresponding period of 2021.
At the end of December, Wix had 222 million registered users worldwide using website builders, many of which are free. Of these, only 6 million had premium subscriptions.
Wix has announced that the cost reductions it designs will save $150 million per year and increase profit margins. The company also approved a $500 million share buyback program.
Starboard, led by Jeff Smith, is one of the most prominent activist investors in the industry and is widely known for its operational expertise. She is also an investor in another website development company, GoDaddy Inc (GDDY.N), in which she held a stake last year.
The hedge fund has not filed any public document requiring the investor to notify US securities regulators when they own 5% or more of the company.
Reporting by Svea Herbst-Bayliss in New YorkEditing by Nick Ziemiński
Source: Reuters Trust Principles.