Fuck outta here! Stop giving these IG thots a platform for doing nothing. Thoughts? Forbes is known for missing on estimates, but this is just ridiculous.
Edit: Had some time this morning to dig through the numbers. Here's what I found strictly relying on the numbers in the Forbes article. If we assume a DLOM range of 30%-50%. Maybe the ER guys will correct me on this. I find her company's valuation to range between $260M and $730M. All below figures in thousands $.
*Updated using bobthebaker’s EBITDA multiple after DLOM method
No doubt, but we are talking about it/Forbes, so who's the real winner here? Also, props for using both Thots and Thoughts in the same thought.
Meet the newest Chief Executive Thot leveraging Thotchain technology to disrupt the thotting industry.
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I feel like the Kardashians are famous at planting info in the media that makes them seem more grandiose and important than they are. It's also sort of misleading to say she's nearly a billionaire because of the value of her privately held company. They say she owns 100% of it but how did she get access to the capital needed to sell 300M worth of product in 2017? Also, being that it's privately held, and built off of a cult of personality there's no way to really ever redeem that company for full value (even if it is worth 900M). It seems like there's a lot of goodwill or intangible assets that could be inflating that value.
Regardless, the Kardashians really have the whole marketing thing down to a science. Basically just plant enough stories in the media about themselves to give everyone the impression that everyone else is under the impression that everything they do matters. This article is a great example of it.
Didn't even think of this (very likely) possibility that this is just a story that was fed to the media by a journalists/writer working for/alongside the Kardashians. Smooth move K fam.
I imagine that when all you need to do is slap your name on shit to move product that manufacturing companies/ banks are more than willing to provide financing.
But does she really have full ownership of 100% of the earnings, or does she own the brand that does licensing deals?
most women targeted consumer products are like that as well and they still trade.
smelled bullshit the second i saw it too
Well, let's look at the numbers rather than jumping to conclusions. I will start by assuming the revenue figures are legitimate. So, according to Forbes, the brand did $330 million in sales and they are valuing the company at $1B pre-DLOM. Using a revenue multiple, the valuation looks ridiculous. Pre-discount the revenue multiple is 3x and post-discount the revenue multiple is 2.4x. I would say both are outlandish for a cosmetics company. But we have to dig deeper than that. According to the article on Kim's net worth, net profit margins are 40%! for Kim's cosmetics line. Since they use the same private label company, I will assume Kylie's cosmetics line attains roughly the same margins. Using a 40% net profit margin, the implied net income is $132 million for 2017. With that information, let's assess a multiple at the EBITDA level. I am assuming there is little to no amortization, depreciation, interest or other income/ expense with a very simple company, let's include the tax affect at 21%. $132 million divided by .79 (to get pre-tax income/ what I am calling EBITDA) gives us $167 million. So pre-discount we get an implied EBITDA multiple of 6.0x and post-discount we get an implied EBITDA multiple of 4.8x, both are relatively reasonable figures. Obviously this assumes 40% net profit margins as well as the actual revenue numbers being accurate.
All that is to say, according to the numbers in the article, she could very well be worth that, or something close.
bravo
Totally agree. The $800 million is actually very conservative if revenue is actually $300MM+, especially in today's market. Look at ACXM - after they complete their recently announced divestiture, they will be a ~$300MM revenue company with no EBITDA, probably growing more slowly than Kylie's company, and they will be valued at $1.5-$2.0B.
And this is just a lip gloss company for now, right? No reason she can't introduce more products and slap her name on them. She has 110 million followers just on Instagram. And she's 20. I hate the Kardashians, but if this were a stock with a market cap of $1B, I'd be buying hand over fist.
I disagree that the valuation is too conservative for a few reasons:
1.) I think they've tapped their market (Kardashian fan-women who are active on social media and willing to buy their product). 2.) Ik the Kardashians have defied all expectation for how long they'd maintain their "15 minutes" but it has to end. They have no talent to maintain staying power. Once their "15 minutes" is over this company's revenue coul fall off of a cliff.
For these two reasons I am not sure I'd even pay $800 million for such a company.
how could she have developed, packaged, processed, shipped $630M worth of product in 2 years and retain 100% of the earnings? Even if you say her implied multiples are fair, on a cash basis, her company is most likely not earning those figures.
This is a great example on why the CASH FLOW statement is more valuable than the income statement.
Well she had her personal fortune to start with, then the business was hot from the very beginning so I assume it was spinning off hella cash, then you can take on debt based on the strength of the company. I'd have to take a closer look but the actual business valuation itself does not seem outlandish. Can't comment on the cap table.
These lists aren't about earnings they've taken out of the business. It's not about liquidity. Jeff Bezos doesn't actually have $100B, nor does Gates or WB.
this is why we come to WSO
I agree with you 100% I think the reason that this is flawed is due to the Cap Table and calling this a self made billionaire by age 19 or whatever.
In reality, if she was 100% self made that cap table would be just Chris Jenner funding her and giving her all the equity for some % of sales crap that the deal is.
I consider myself a capitalist but upon hearing this all I can hear in my head is: is we the proletariat have to overthrow these bourgeoisie
Ill get the pitchforks, you get the torches
We don't have anything like real capitalism here in America...we're at best just a couple notches (out of, like, 100) away from full-on socialism.
...yeah that's unfortunately pretty true
Morgan Spurlock (the "Supersize Me" guy), reviewed some of this on one of his documentary shows on TV (CNBC?)
The Kardashians actually get paid every time they are in the media by the media platform. So they actually release details of what they are doing, then make it look like paparazzi. You have to respect that hustle.
Always, Forbes or whatever never dives enough into the details (I didn't read the article, but have read others. ) It's all to grab eye balls. For example, Jess Alba is a billionaire because of the Honest brand, or Aston Kusher is making billions off of his Uber investment. All are probably true, but the media paints it like Aston is VC deals by himself and doing valuations. It's like when the Brooklyn Nets says Rhianna is an owner, she is, but like .002% of an owner.
Considering she gets paid $1M before taxes for a promoted IG post, i'm not surprised.
This is definitely bullshit. So if she released 1 promoted post a week she'd net $52 million? Sounds like fake news.
That may be high, but if she posts something on Instagram, 100+ million people will see it. That's like Superbowl audience level. So maybe it's not $1M, but why wouldn't a company pay a few hundred k for that reach?
Prob up to 1m on the high end, but the norm would be 50-100k i'd think. Still insane.
The big issue here is that Forbes said she is "self-made." That is absolute garbage and not inspiring at all.
I agree self-made is a BS term, because there is no clear definition of it. "Self-made" like you literally were dumped on a street naked with no connections or money? Or "Self-made" like my grandfather built this company and I'm taking it over.
People love to throw those titles around.
If she was your sister, she wouldn't have done this. She did it because her family is famous.
I am about as much a fan of the Kardashians as I am of having molten-hot lead poured into my urethra.
That being said, the valuation for her business is pretty sound. The question is whether she owns it outright or has financial partners on the cap table.
BobTheBaker did the math accurately.
I can attest to the margins in the personal care goods sector. Cosmetics margins can vary from 30-70%. If it's a luxury or higher-end brand, you're going to see the upper portion of that range.
It was shocking to look at how favorable the unit economics are on these things. The moisturizer that your girlfriend pays $110 for a 2-oz. pump bottle of costs the company $48 to manufacture.
So if Kylie's business does $330m in revenue, my immediate read as an investor is that she's doing $165m gross. Post-tax, $125m. A $900m valuation is only a 7.2x multiple.
That's cheap, honestly. You would want to look at repeat purchase rate (e.g. this sector's version of 'churn') and all the other levers that go into LTV, but I guarantee you if you weight that against CAC this company looks prettier than the average teenager seems to think Kylie does.
The other factor every single person posting here seems to overlook is exactly how obsessed people under the age of 21 are with social media. It is absolutely unreal. The metrics for Gen-Z phone engagement are eye-popping.
Think about it. Those of us in our late 20s/early 30s got smartphones as teenagers. Once we had them, we had five years before social media developers figured out the perfect behavioral mechanisms by which humans are manipulable, meaning (a) our brains weren't baked exclusively during a period where smartphones were ubiquitous and (b) we weren't as hooked on them to begin with.
Contrast that to kids today who get smartphones before they're 10. They spend a minimum of 15 years before their brains are fully developed (at roughly 25 years old) having their entire neurochemistry built around behavioral patterns influenced by technology usage.
Gen-Z hasn't even hit the age of mental maturity yet, they're all still in college. I don't think we as a society talk enough about the huge gap between Millennials (who may accurately be called 'digital natives') and Gen-Z, the first generation to spend their entire life in the glow of a smartphone.
This entire family, but especially Kylie and Kendall, have a population big enough to be one of the planet's 20 largest countries following their every move online. That's just counting active followership, not inactive or adjacent followership (people who see stuff from them in their personal feeds even without following the family directly).
So if the revenue figures are correct, the front-page cover story looks accurate. For the record, a couple of my guys had already done this envelope math last year when we heard earlier revenue numbers she was putting up.
She has a really narrow product lineup so far. You could expand this pretty easily on two legs: distribution and product offering. She could select multiple physical retailers to carry her product line, and she could roll out one new product category a year (perfume, hair care, brow stuff, skin care, body wash, lotion and creams ...).
Good distribution probably doubles sales within three years, triples it within five maybe. Good product expansion adds 30% a year maybe. Matrix those together and you're looking at a sensitivity analysis where your bullish outcomes are a 10x on today's revenue.
10x today's revenue would put her at $3.3b ... exactly a third of Chanel's 2017 revenue ($9.7b).
Let's not forget that Chanel was exactly this. A popular (and mildly controversial in some socially conservative circles) sex symbol who allowed her name to grace the products that a male marketing executive started cranking out across multiple categories.
And that business was built in a different economy where you didn't enjoy digital customer acquisition, high ease of outsourced production, and no requirement for a physical retail footprint like you do today.
All in all, I am absolutely a bull on the company. The fans are never going away, as much as anyone might wish they would, which means the family is never going away. If she avoids the Jessica Alba phenomenon and actually installs competent business executives who can steer the thing successfully, there's a real chance for sustained growth in the business.
You didn't account for SG&A dude. Assuming the $165M figure is right, and a 42% sg&a margin, that gets us to $26.4M EBIT. Using your tax rate of 21% gets us a NI of $20.9M, which makes out Net Income Multiple (Why the fuck are we using a NI mutiple to begin with) of 43X. Also an EBIT Multiple of 34x.
The industry EBIT Multiple is 19x
.
Let’s tax business owners more instead of this fucking pig.
Hollywood is cancer.
lolwut?? She doesn't count as a business owner??
p.s. Hollywood doesn't force the lemmings to watch this garbage
I am pro abortion and this whole family is a compelling case.
Business owner? Bro, please.
I wonder whether Seinfeld is worth a full Billi under the table or nah...
He must be, he has "fuck me" money as Adam Carolla famously coined. He says he's been offered truly unlimited blank cheques to bring the show back, and has turned it down.
The Porsche collection certainly has helped in the last decade.
I wonder if bringing the show back would lower the value of the syndication
What a thing to read and wake up to with my coffee... this is $36 bucks too much... geez, is today Friday the 13th or April Fool's Day?
https://www.msn.com/en-us/tv/celebrity/theres-a-gofundme-dedicated-to-r…
It's not April Fool's Day, unfortunately. But some strange things have happened on Friday the 13th
was hoping this story would make the rounds, bravo WSO and bravo BobTheBaker
Only in America...
Strongly considering switching my focus from IB to IG now.
If she realizes a $1B net worth (this company holds its value over the next 3-5 years, or she reinvests cash proceeds into something that valuable) who wants to pull the trigger on my premature death? BobTheBaker ? APAE ? MMBanker14 ? Takers?
Lol. What the hell are we all doing with our lives?
APAE's analysis is spot on here. I'm actually not surprised by the valuation whatsoever; if anything, it was a bit conservative, as I don't think Forbes fully realizes the power of digital advertising and social media's hold on young people.
I did laugh when she was described as "self-made." Come on.
Last days of the Roman Empire
(EDITED, because I'm petty)
@iBankedUp" I would categorize Kris' management fee (where did you get this number from?) as other expense as it isn't an operational in nature. Since that is the case, you are assesing an EBIT multiple and not an EBITDA multiple in your above calculation. Additionally, a DLOM of 30%-50% is too high in my opinion. Think of the nature of a DLOM, it is a discount meant to reflect the reality that shares in a private business cannot be sold as quickly as shares in a public one. The DLOM should increase as the illiquidity of a companies' shares increases. I don't think shares in this company are THAT illiquid. It is a visible business with a simple capital structure (presumably). DLOMs as high as you are citing should be left to companies with complicated partnership structures where a fly in the ointment (like a disgruntled partner who doesn't want to sell) can make it difficult to exit. If Kylie owns 100% of this business then she can decide to sell at her behest. Because of this, I think the 20% DLOM is appropriate, it could even be conservative. All this is to say, you might need to go ahead and accept that $800MM-$1B valuation.
That is taken from the Forbes article.
Maybe that is the case. But even if you accept the higher end of the multiple range, that still doesn't get her north of $800M. And when you do go to the higher end, it's just getting to be expensive.
20% is liberal IMO. I would place a reasonable discount to the business value mostly being tied to Kylie's name recognition and celebrity status, especially since it's amongst a very disloyal teenaged girl subset.
I'm going to be difficult about giving this family any credibility. Granted, they'll most likely die rich, and maybe even their kids. But, in my eyes they are still just attention seeking rejects.
We can just agree to disagree on the Kardashians too.
"self-made"? Uh... Forbes... Kim's sex tape? Which is self-made I guess...
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