Investing.com -- Several Wall Street banks downgraded Wix.com on Wednesday after the website-builder delivered a disappointing first-quarter print that raised fresh concerns about the competitive threat from AI-powered coding tools.

Shares in the company plunged 27.10% to $55.32.

Wells Fargo cut its rating to Equal Weight from Overweight and slashed its price target to $54 from $137. RBC Capital Markets, which described the print as "very challenging," downgraded to Sector Perform from Outperform with a new $60 target, down from $90. Citi moved to Neutral from Buy, lowering its target to $66 from $105.

While total bookings of $585 million grew 15% year-on-year and came in broadly in line with expectations, analysts flagged that strength was increasingly coming from Base44, Wix’s AI app-building acquisition, rather than from the company’s core creative subscription business.

Wells Fargo estimated that core creative subscription bookings growth decelerated to roughly 2% year-on-year in the first quarter, from 9% in the fourth quarter, and attributed the slowdown to competition from AI "vibe coding" tools.

"The end market accelerated, but competitive pressures impacting growth to a greater extent than we expected," Wells Fargo analyst Alec Brondolo said in a note.

The partner channel — web design agencies that resell Wix services — was a particular weak spot. Management attributed the weakness to execution issues and product delays related to the Middle East conflict.

RBC analysts including Brad Erickson said that "today’s Partner weakness is the clearest signal to date of vibe coding headwinds setting in," suggesting agencies may be seeing declining demand for their own services as consumer-friendly AI tools proliferate.

Base44, meanwhile, reached $150 million in annualized recurring revenue (ARR) in May, up from $100 million in early March, which analysts acknowledged as impressive. But heavy marketing and AI compute costs associated with scaling the product weighed on margins.

Adjusted gross margin fell to 66.2% in the quarter from 68.8% a year earlier, and sales and marketing expense surged 88% year-on-year. Wells Fargo cut its 2026 and 2027 free cash flow estimates by 26% and 13%, respectively. Citi trimmed its adjusted EBITDA projections by roughly 35% for 2026 and 30% for 2027.

Wix maintained its full-year guidance for mid-teens revenue and bookings growth, but it cut its free cash flow margin outlook to the high-teens from a prior low-to-mid 20% range, citing headwinds from its post-tender capital structure and Israeli shekel appreciation.

Citi said it expects "structurally lower margins as Base44 likely impacts profitability going forward," while RBC noted that Base44’s customer lifetime value metrics are unlikely to be visible before next year, leaving the investment case clouded in the near term.