Wix.com Shares Plunge 27% After Q1 Expenses Jump 46%
WIX•Wix.com reported a 46% year-over-year surge in Q1 2026 operating expenses, with S&M costs up 88% to $190.7 million and non-GAAP operating margin falling from 21% to 5%. Shares plunged 27%, erasing $1.1 billion in market capitalization and triggering a legal probe into investor misinformation on AI spending.
1. Q1 Financial Results
Wix.com’s Q1 2026 report showed total operating expenses rose 46% year-over-year, driven by non-GAAP sales and marketing expenses climbing 88% to $190.7 million. This surge caused non-GAAP operating margin to shrink from 21% in the year-ago quarter to just 5%.
2. Market Reaction
On May 13, shares of Wix.com plunged 27%, wiping out roughly $1.1 billion in market capitalization as investors reacted to the unexpected cost escalation and margin collapse.
3. AI Investment Strategy
Wix.com’s AI initiatives, Base44 and Harmony, were rolled out with front-loaded compute and sales-and-marketing expenditures. The rapid expansion of these tools altered the company’s cost structure, contributing to the steep rise in operating expenses.
4. Legal Investigation
A shareholder rights firm has opened an investigation into whether Wix.com misled investors about the impact of its AI-driven spending. The probe examines potential violations of federal securities laws and is soliciting information from affected investors.
