Base44 and heavy spending on AI enhancements are spooking investors.
After a period when Wix.com appeared to be regaining momentum and returning to steady growth, the company’s early 2026 results showed renewed pressure, including a return to losses, sending the stock down 27% on Wall Street.
Just about a month after the company completed an unusual $1.6 billion stock buyback program, the sharp decline has reduced Wix’s market capitalization to about $3 billion, the lowest level in the company’s history. Wix funded the share buyback partly with cash on hand and partly through a $500 million line of credit. At the end of the quarter, the company had about $2 billion in cash and an additional $1.1 billion in long-term debt raised through convertible notes last year.
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Wix has been caught up in the negative sentiment surrounding software stocks over the past six months, even though it doesn’t operate on a traditional software-as-a-service (SaaS) model. Investors are increasingly concerned that the company’s core product for building websites and online stores will become less relevant in the age of AI, where websites are increasingly being automatically generated through AI-powered coding tools.
In response to these concerns, Wix moved quickly last year to acquire Base44, a startup founded by Maor Shlomo that develops software building tools based on natural language instructions. The business is growing rapidly and helping Wix strengthen its AI offering, but investors remain unconvinced about the company’s long-term position in the increasingly competitive AI market.
The company’s return to the red in the first quarter appears to have heightened investor concerns. Wix posted a net loss of $57.5 million after several quarters of profitability, even though it reported a 14% increase in revenue to $541 million. Cash flow also fell 21% to $112 million.
The company cited significant increases in marketing and sales expenses as the main causes of the loss, as well as additional payments related to its acquisition agreement with Base44 founder Maor Shlomo. Wix aired two Super Bowl commercials this year. One promotes Wix products and the other focuses on Base44.
At the same time, strong demand for Base44’s AI-powered “vibe coding” platform, which has already exceeded expectations for an annual revenue run rate of more than $100 million, is forcing Wix to make further milestone payments to Shlomo. During the quarter, Wix paid him an additional $38 million, and the company now estimates that additional payments will probably be required later this year.
According to Wix, Base44’s annual recurring revenue reached $150 million in May, significantly exceeding internal targets.
The rapid growth of the Base44 business has created a complex situation for Wix. On the other hand, the company is positioning itself as an increasingly relevant player in AI-powered software development and may be responsible for a large share of the current growth. On the other hand, scaling comes with significant computing costs as usage grows.
Wix is also actively investing in building its own AI models. Founder and CEO Abishai Abrahami said in a letter to investors that the model aims to improve the accuracy of Harmony, Wix’s AI-based website building platform. Although this effort currently increases expenses, the company believes it will reduce inference costs in the future.
Wix hasn’t discussed any layoffs at this time, but its headcount decreased by 63 people in the quarter, bringing the company’s global workforce to 5,277.
The company also declined to provide detailed guidance for the remainder of the year, offering only a rough estimate of growth at a pace similar to that recorded in the first quarter.
