Let's Break Down Wix's Reasons For Laying Off 20% of its Workforce

Wix CEO and co-founder Avishai Abrahami posted a message to X on May 28 and sent it to all 5,277 employees simultaneously. The company will be cutting about 20% of its workforce — around 1,000 people — the largest layoff in Wix’s history.

“Today is a sad day for me,” Abrahami wrote. “We have made a very hard decision. We are reducing the Wix team size by roughly 20%. It is one of the hardest decisions I have had to make, but I am confident it is the right one, and I will explain why.”

He gave two reasons, in a specific order. And they’re worth dissecting — at least just a little bit.

The Shekel Argument

The first reason was currency.

“In the past few quarters the exchange rate between the Shekel and the US dollar has shifted significantly as the Israeli Shekel strengthens against the US Dollar almost every day,” Abrahami wrote.

Without diving into the principles of the economics, the shekel has been appreciating sharply in 2025 and 2026, reaching a 33‑year high of around 2.90 to 3.00 shekels per dollar. Wix receives most of its revenue in U.S. dollars, while more than 60% of its workforce is Israel-based and gets paid in shekel currency.

So, in perspective, a Wix employee receiving the equivalent of $75,000 is 211,350 shekels. This, of course, doesn’t matter unless you consider what 200 thousand shekels can get you. What we do know is that, with the new shekel strength, Wix gets 25% less local currency revenue, while salaries, office rent, and taxes are still paid in shekels.

Basically, each dollar of revenue converts to fewer shekels, which is a problem when Wix’s operating expenses surged from 21% in Q1 2025 to 35% in Q1 2026, thanks to aggressive marketing spending, the Base44 acquisition, and of course, AI compute costs.

The AI Argument

So it may not come as any surprise that the second reason Abrahami gave for laying off 1,000 folks is because of the acceleration of AI.

“This is not just about adopting new tools – it is about rewiring how companies are built, how they think, how they manage and how they operate,” Abrahami wrote.

This is a tough one because we’ve all already heard every tech CEO utter the same words as Abrahami did: Jack Dorsey (former Twitter CEO) used similar words, citing “smaller and flatter” teams and a “new way of working.” Cisco and Meta used variations of the same thing — you know, just with a different enterprise logo in the letterhead.

Even a Fortune piece this week quoted MIT Sloan professor Paul Osterman, who called AI “a perfect excuse to justify big layoffs,” adding that companies have been making the same argument for 20 years.

But pressure from AI is absolutely real. Everyone’s feeling it.

Still, Abrahami’s X memo made it sound like Wix is more or less restructuring around AI, getting ahead of the curve, and cutting people because AI can do what they once did. But in reality, Wix is on the receiving end.

Let me explain. Lovable, a Swedish AI startup that lets anyone build a full app by describing it in plain English, went from $0 to $400 million ARR in less than two years. Last year, Wix spent $80 million acquiring vibe-coding platform Base44 seemingly to stay in the race. Wix also admitted that professional developer customers were using competing AI tools, according to a May 2026 earnings call.

They did this because Wix’s core value prop is to make web creation easier; now, so many other platforms are doing just that, just easier and cheaper. It’s not quite paying off, with Wix’s market capital already down to around $2 billion from nearly $20 billion at its 2021 peak.

In layman terms, the market thinks that Wix is worth about 90% less than it did five years ago. Ouch.

So no, this 1,000-person layoff won’t fix the problem, but it certainly buys Wix time to figure out its new place in a very saturated market.