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Starboard had been building the stake, and spoke to Wix about
how it can improve operations, Reuters reported earlier in the
day, citing sources familiar with the matter.
Wix has been struggling with losses since the fourth quarter of
2021 amid a slowdown in e-commerce driven by rampant inflation
and people making fewer purchases online in the wake of the
COVID-19 pandemic. It has adopted a three-year cost-cutting
program in a bid to boost its ailing stock price.
Starboard supports Wix's bid to become profitable and believes
the company has a significant opportunity to improve its margins
and grow further, sources said.
The fund has been discussing its ideas with Wix's management and
is not seeking board seats at this time, the sources added.
Details of Starboard's suggestions to Wix could not be learned.
The sources requested anonymity because the matter is
confidential. Wix and Starboard did not immediately respond to
requests for comment.
Wix, an Israel-based company whose stock is listed in the United
States, has a market value of roughly $4.4 billion. Its shares
have lost 54% of their value this year on concerns about clients
not paying enough for its products. The company posted a loss
for the three months to the end of June of $111.2 million,
compared to a $37.6 million profit in the corresponding period
in 2021.
Wix had 222 million registered users worldwide using its website
development tools, many of them for free, as of the end of
December. Out of those, only 6 million had premium
subscriptions.
Wix has announced cost cuts it projects will save $150 million a
year and grow its profit margins. The company also authorized a
$500-million share buyback program.
Starboard, which is led by Jeff Smith, is one of the industry's
most prominent activist investors and is widely known for its
operational expertise. It is also an investor in another website
development services company, GoDaddy Inc, where it amassed a
stake last year.
(Reporting by Svea Herbst-Bayliss in New York and Akash Sriram
in Bengaluru; Editing by Nick Zieminski and Maju Samuel)
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