Start up web building company Wix.com Ltd.’s CFO is not at all fazed by the company’s inability to raise forecast income for the year.
The Israeli company’s CFO, Lior Shemesh, is in fact planning an advertising splurge for next year, similar to one they did last year, despite the fact that traders are punishing technology companies that show anything less than robust growth, according to Bloomberg.com.
This resulted in a loss of $248 million of market value for Wix.
The Tel Aviv-based company used National Football League legends such as former quarterback Brett Favre in a 30-second Super Bowl commercial last year. The ad cost Wix somewhere between $4 million and $6 million, JPMorgan Chase & Co. estimated at the time, about 10 percent of revenue in the fourth-quarter of 2014. Wix was the worst performer on the Bloomberg Israel-US Equity Index in the five days through Aug. 7 after Caesarstone Sdot-Yam Ltd., the maker of quartz counter tops that reduced its 2015 revenue forecast last week, spurring a 25 percent decline. The index dropped 1.8 percent.
Shemesh is unfazed by the stock performance. He says profitability will improve in coming quarters because Wix is getting more “operating leverage,” meaning its revenue growth is picking up speed while expenses are roughly unchanged. He’s confident enough that he’s already working on a new Wix ad for next year’s Super Bowl.
Read the Bloomberg story here.