If wallstreetoasis.com went public, what would you value it at and would you invest?
So all these social networking sites going public got me thinking, what if wall street oasis went public. What do you think it would be valued at, would you invest in it, how would you alter the website to make it more profitable, etc.?
This is just a for fun question btw, so if the owner of this site finds it offensive or something, feel free to lock/delete. But I was just wondering about this randomly. How would one go about valuing this site anyway?
First you have to ask yourself how WallStreetOasis makes money. I don't see any ads on the site other than ones advertising modeling programs.
Then you have to ask if the revenue they bring in is above their costs - i.e., are they in the red or making a profit?
I can't possibly see how WallStreetOasis makes a significant amount even though they have a big user base. There is no advertising!
Yes there is - your browser probably blocks it.
You are forgetting about guides
First, I think there would be very little upside to Patrick in going public. This particular business model lends itself far better to buyout a la AOL's purchase of Huffington Post. We've never really talked about it so I don't know, but I'd be pretty surprised if he sold WSO any time soon.
As for valuation, he's was pretty forthcoming about the numbers in the Mixergy interview, and the site has a pretty sick profit margin. Based on that and the recent valuations of LinkedIn, Groupon, and Facebook, I'd ballpark WSO's market cap around $17 billion.
I cant tell if you are being serious
No way. $30bil+ or bust
^^ You're right. I forgot I had ad-blocker plug-in on my Firefox browser.
The valuation would be based on revenue and growth potential. WSO has several revenue streams: 1) advertising, 2) services such as interview guides, resume prep, (likely by far the most profitable part of this biz) etc, and 3) job listings. Probably others, as I am not entirely versed here.
The addressable market is small, being limited to prospective bankers, lawyers, and the like. It is an interesting demographic with a mix of rich guys and broke but aspirational college students, mostly male, so net net probably a fairly decent audience although lack of scale makes things far less interesting here.
Overall, growth would be limited by the number of people coming to this site (likely very low, I don't see them tracked by comScore). I would expect WSO revenue growth rates in the single digits for WSO relative to the supercharged growth rates we see at some of the other Internet companies. Maybe higher, let's say 10-20% YoY due to the ad market and new products. Without traffic data, revenue expectations are extremely difficult to estimate, maybe 100-200k per year, perhaps more? How many of you guys are buying these resume guides and stuff like that?
So anyway I'd expect EBITDA margin in the rough ~5-10% range, so lets say 10-20k EBITDA per year. Slap on a 16x multiple and you have a $160K - 320K EV, slap a 2.5x Price/Sales and you'd have $250K - $450K EV. Obviously these numbers go up or down based on revenue / EBITDA margin projections.
WSO would make a great asset at one of these companies that owns a collection of sites. Packaging WSOs audience alongside a larger collection of sites makes for a much more interesting advertising story. But I suspect the real story here is with the services component, and honestly I have no idea how to gauge the number of $1600 interview prep guides they are selling. These may be very profitable, perhaps well above the 5-10% EBITDA range I estimated! Frankly, this is what is going to drive the valuation here.
Obviously if they went the IPO route the EV would likely be around $23 - 40Billion.
1 bil isn't cool. now a trillion, that's cool
So, Patrick is a billionaire on paper? Congrats.
will give you guys a bit more to chew on since this is entertaining.
EBITDA margins are ~70-80% (pay myself a modest salary) depending on how much we spend on web dev. in a given month Traffic - 900k visits a month, ~3.2-3.8 million pageviews/month ~56k registered users
Equity stakes for top users should be discussed.
Is that 900k uniques a month? Nice, you had said 350k/month 5 months ago in the interview Eddie linked to.
I think a multiple of 16 is a bit high (No offense Patrick), I'm going to pull a number out of my derrière and say 11.
I'm not even going to try and guess revenues other than Ad-related, so this probably a ways off.
-CPM is probably $10 now -Average of 2.5 ads per page -3.5 m page views -(3,500,000 * 2.5) = 8,750,000 impressions per month -Using: CPM x Impressions / 1000 = Ad Revenue -Margin of 75%
(8,750,000 * 10)/1000 = $87,500 per month
87,500 * .75 = profit of $65,625 per month, or $787,500 per year.
No idea what taxes are, lets say 30% for a fun number. 787,500 * 70% = $551,250
Using the 11 multiple I mentioned earlier, that means its value is roughly $6,063,750.
Bonus problem: Find Patrick's modest salary.
In the interview mentioned earlier, he had estimated the EBITDA at 85-90% but I don't think he took a salary then. We'll use EBITDAs of 87.50% then and 75% now for simplicity. Assuming 2.5% lost to increased tech support/size-issues and that the rest of the difference is going to his salary, that means he's getting around 10% of revenue.
$87,500 * 12 = revenue of $1,050,000
$1.050,000 * 10% = $105,000
Edit for math goof-up
"They're trying to make me pee my pants, but they're too late" "Boil up some Mountain Dew; it's gonna be a long night." "I've finally stopped crying but that's only because I started vomiting"
If you do this right, you can cash out in the millions, I am ballparking the revenue but based off the traffic I can guess how much you are making, perhaps $10,000 a month? ...I would start networking right now. There are seasoned internet brokers who regularly sell ecommerce sites and membership sites, so they'll know potential buyers or how to pitch this thing.
Advice: Check out the book 4 hour work week. Tim ferris had an online ecommerce site selling protein powder and cashed out. I think bodybuilding.com picked it up, and that site has an extensive forum and ecommerce site. Probably the best implementation of both I have ever seen. there are synergies to be had with forums and ecommerce...
Just had to go and stir up the pot didn't ya.... ;)
LinkedIn is getting about $30 per registered user, so $1.6 million for WSO based on that metric. Based on page views? WSO is around a nice $4.4 million.
^Hahaha before reading replies I did similar math above and came to a few million as a valuation as well.
I believe equity stakes were discussed a few years ago when things were getting going. Looks like you missed the boat!
I would have never thought this site is worth even close to a million. That is very impressive.
i would short it
Based on this thread info and the link Eddie posted, if I were in the market I'd feel comfortable paying about $1 million for this site, $1.5 million tops. Eddie is 110% right--the site is far more valuable to the present owner than it would be as a public company or even to a new private buyer. Patrick has his contacts, knows exactly what he's doing, has the process streamlined and his own technical knowledge helps him reduce costs.
In my view, it would make no sense for Patrick to sell the site unless someone were offering $2 million + for the site. Otherwise, I think on an annual basis it's worth more to him as-is.
Very interesting thread.
If I was you, Patrick, I would look at a few multiples and apply the highest of those (+ a decent premium for wiggle room) for an asking price for a piece of the firm. Price per view, price per registered member, price/sales, price/cash flow, or whatever looks best. The reality is that at this size of firm, it is 100% a negotiation and a positioning exercise. If you can get a couple of family offices or small VCs bidding on your firm, the sky's the limit. Especially if most of the capital is going towards growth, instead of just cashing out. If you can get some growth capital and/or take a little off the table, that seems like a good outcome from the outside looking in. Since you are cash flow positive (from what I can tell), you have plenty of time and significant negotiating leverage. You could start many conversations, with very low risk, unlike the average start-up that is desparate for cash.
Many of the people/firms who invest in firms like wallstreetoasis.com put a radically different valuation on the company if there is additional money to spend on technology and content, if they believe you can manage the company well through an accelerated phase of growth. If that investor doesn't think you can manage the company to the next level, find another investor who believes in you or find another investor who will pay a large enough premium to attract the CEO or other leadership position they seek where it is financially worth your while to leave or take a secondary role.
There's a possibility you take an equity investment and it does nothing to alter the growth of your firm and there is also a possibility that you take $2 million for selling 10% of the firm and you increase your revenues or profits by a lot more than 10%. You never know for sure, but if you get a reasonable investor, you should be OK either way.
My $0.02.
There's no way this site is worth anything close to $20 million. You're talking "bringing in a CEO", etc. That's not realistic. Patrick has himself and 1 employee bringing in probably $20-30k/month and he's pocketing around 80-90% of it, which is fantastic money for running what amounts to an American small business run out of Argentina. The only way you'd get anything close to $20 million is if a prospective buyer saw a revenue stream that doesn't yet exist or is not yet known by Patrick. If that were the case, why would the buyer offer $20 million for something he could get for $2 million or, more specifically, why would someone pay $2 million for a $20,000 cut of net income?
People should understand that "Wall Street" is a finite market in the most literal sense of the word. That there are 40-50,000 registered users is breathtaking in itself, but realistically how fast can a site dedictated to, very specifically, jobs/careers in high finance grow? This site isn't the future facebook (unless Patrick makes a lot of changes and moves in that direction). This site is at its core a small business that is subject to the laws of diminishing marginal utility. I would personally buy this site in a heartbeat at $1 million and probably with little question at $1.5 million and then expect annual growth of 3-5%/year in users and revenue. But Patrick would be crazy to sell for that price if he's pulling in $200,000 in annual income unless he had some sick business venture he needed liquidity for.
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