The Motley Fool Take
Wix.com is a top e-commerce platform helping small businesses around the world to get online functionality such as:
Wix’s code-free website building business has had a busy year in 2021 so far. Earlier this year, it announced that the number of registered users had exceeded 200 million, a number that is still growing.
Wix is now focused on premium features, its fastest growing segment reported as “Business Solutions”. In the first quarter, revenue generated by this unit was only about a quarter of the company’s total revenue, but it grew 97% year over year.
A number of new features have been introduced to further strengthen this part of the Wix platform. The company acquired a small gift card and loyalty business, as well as a supplier marketplace and drop shipping company, to round out its online sales and order fulfillment offerings. It also introduced a new point-of-sale system that allows Wix users to take payments in person. And a new mobile app is helping restaurants create their own websites so diners can browse menus and place orders on the go.
This is a promising tech company with great long-term potential through its hundreds of millions of small businesses. (The Motley Fool owns shares of Wix.com and has recommended Wix.com.)
Ask the fool
From DK in Fort Myers, Florida: What are SaaS Companies?
The Fool replies: The letters stand for “Software as a Service,” and SaaS companies are those who offer cloud-based software, often for businesses, through subscriptions. So instead of buying and downloading a software package, a customer pays continuously for on-demand access to it. This makes updating easy and leaves the responsibility for storing customer data to the providers and keeping it safe.
Tax preparation software is an example of SaaS that is used by many consumers. While it used to be sold in a box, many people today simply access it through a website. Office productivity software is different: even Microsoft has switched its dominant office suite (which includes Word, Excel, Outlook, and more) to a subscription model.
Another example is Axon Enterprise: it invites law enforcement agencies to subscribe to its Evidence.com service, which collects and analyzes footage from body cameras. Veeva Systems offers a range of cloud-based services to the pharmaceutical industry, such as clinical trial management and customer relationship management.
SaaS companies have an attractive business model for investors, as customers are usually tied to regular subscription payments and it can be costly for them to switch to an alternative provider.
From Human Resources in Sacramento, California: What Do “Cops” and “Bears” Relate to in the Financial World?
The fool replies: you are referring to the optimists and pessimists among investors. A “bull” is someone who is “bullish” about an investment and expects it to perform well while bears anticipate falling values.
Nobody really knows how the market (or individual stocks) will perform in the short term, but in the long run the stock market has always risen. So we at The Motley Fool are long-term cops.
The school of the fool
For the best results when investing in stocks, here are some tips to keep in mind:
Be ready to invest. Pay off high-interest debt and set up an emergency fund before investing.
Think long-term – and be patient. Stocks can make you rich, but you usually have to keep them for many years.
Invest aggressively, and soon. The first dollars you invest have the longest time to grow for you, so invest meaningful sums of money as soon as possible, and on a regular basis.
Have rational expectations. Expect the market (and your stocks) to rise and fall. Expect some losses.
Keep your emotions in check. Don’t sell in a frantic rush when the market faints, or grab stocks of hot stocks at any cost just to own them.
Know what you are investing in. Before you invest in companies, do some research: learn how they make their money, how healthy they are, how much growth potential they have, and what their risks and opportunities are.
Diversify. Don’t keep all your eggs in one basket. Spread your dollars across different types of businesses.
Watch your performance. If your stock picks haven’t outperformed the entire stock market for several years, then consider simply investing in index funds that deliver roughly the same returns as the market.
Have a margin of safety. Try to buy stocks when they appear undervalued. Overpriced stocks are more likely to fall, while undervalued stocks have a built-in safety margin.
Make it easy for yourself with index funds. Investing in stocks doesn’t have to be complicated. Most of us would do well to just stick with broad, low-fee index funds.
Keep learning. At least learn from your mistakes to avoid costly mistakes. Reading books or articles about investing, great investors, and great companies can make you a more savvy investor too.
My stupidest investment
From a shared flat, online: My stupidest investment – so far! – filled my portfolio with stocks from my employer. I knew there was a risk as I would be dependent on the same company not only for my salary and benefits, but also for my financial future. Still, I thought the stock would hold or go up because I knew the business well.
When the price fell, I still thought the company was strong and that it was going to bounce back. My inactivity resulted in a 75% to 80% decline over a long period of time.
The Motley Fool has since given me confidence and a better plan for that money. And on the positive side, I have a nice loss carryforward to offset capital gains on my next tax return.
The fool replies: It’s easy to see why people make this mistake: they know the company they work for better than any other company. But even apparently solid companies can fail. Keep in mind that there have been long periods of time when few would have expected companies like Eastman Kodak, Toys R Us, Hertz, Sports Authority, and JC Penney to struggle and file for bankruptcy protection or cease operations.
It is risky to top up your employer’s stock. When you buy something, you keep it in a modest part of your total portfolio – maybe only 10 to 20%.
Who am I?
My roots go back to 1909 when I started making hair dyes and selling them to hairdressers. Today, based near Paris and recently valued at over $ 260 billion, I’m the world’s largest cosmetics company (by revenue), with more than 85,000 employees and annual sales of around $ 34 billion. My 35 brands include CeraVe, Dark and Lovely, Diesel, Garnier, Giorgio Armani, Helena Rubinstein, Lancome, Matrix, Maybelline New York, Prada, Ralph Lauren Fragrances, Redken, Urban Decay, Valentino, Yves Saint Laurent – and mine own name, of course. My brand ambassadors include Viola Davis and Celine Dion. Who am I?
Can’t you remember the question from last week? Find it here.
Last week’s quiz answer: Techtronic Industries
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