sex.com - your final exam in valuation.

[DomainAppraiser]

D+

Nobody is using the principles of finance?

Originally posted by Tee
I'd say the name is worth at least $500,000,000.

Mainly because I think it makes about 65 mil a year. So if you paid 5 years income for it and threw in some vanity money, it would cost about 500 mill. Might be worth more.

The biggest reasons its worth so much, beyond what it produces in income, or perhaps why it produces so much income, is because it is sex and .com. It has the dual traffic of being a .com and being sex. Sex is why the species exist and is desired often and .com is the most well known extension on the internet. Oh yeah, and it is short.


Definitely the single most valuable domain name there is imo.

 

[j8jweb]

Well, it can't cost more than, say, $10 for each years renewal fees, so going by the earlier mentioned idea that the internet survives another 10 years, I would say $100 in total.

 

[DomainAppraiser]

D+

How do you get from $5 million to $80 million in financial terms?

Originally posted by Ed30
Income c.$5m a year - value c.$80m.

 

[DomainAppraiser]

F---

Funny. An F triple - is a very difficult grade to achieve. Congrats.

Originally posted by j8jweb
Well, it can't cost more than, say, $10 for each years renewal fees, so going by the earlier mentioned idea that the internet survives another 10 years, I would say $100 in total.

 

[Ed30]

1. The site isn't that good.

2. The $65m comp package was for income over several years and probably took huge lawyers fees into consideration.

3. Their are much better adult sites out there (I guess ).

 

[DomainAppraiser]

Incomplete.

I'd like to see where you'd go with this before assigning a final grade.

Originally posted by Ed30
1. The site isn't that good.

2. The $65m comp package was for income over several years and probably took huge lawyers fees into consideration.

3. Their are much better adult sites out there (I guess ).

 

[Tee]

Without knowing exactly what the site makes in terms of income, it is difficult to give realistic numbers. I've read that sex.com makes anywhere from 36 million a year to 100 million year.

Some buyers would pay anywhere from 5-10 years income up front.

Then you have to figure that there is some prestige and vanity value to the name beyond how much it actually earns.

On the negative side, maybe this is too high an appraissal. Maybe a revolutionary technology ends domain name use in 3 years or severely changes it. Maybe the internets vulnerability as a market form to a terrorist attack or some other force changes value in a negative way.


Its difficult to say how much it is worth.

But you are looking for a more sophisticated financial analysis based on time I guess.

 

[Ed30]

Sex.com has not been marketed that well or branded at all. The owner is relying on the usual type-in traffic and search engine traffic. Income could be greatly inhanced (in my opinion) if he decided to partner with some of the big players in the adult industry (and there are only a dozen or so). He's slapped up a site gets a good income from it and best of luck to him - but it could do alot better.

 

[Tee]

It could definitely do much better.

I guess a lot of real worth of this name lies in its real potential.

But a lot of that is vague without knowing exact numbers and what exactly it is doing now.imo.

 

[DomainAppraiser]

C

HIGHEST GRADE EVER SO FAR.

A financial analysis is needed... good start.

Originally posted by Tee
Without knowing exactly what the site makes in terms of income, it is difficult to give realistic numbers. I've read that sex.com makes anywhere from 36 million a year to 100 million year.

Some buyers would pay anywhere from 5-10 years income up front.

Then you have to figure that there is some prestige and vanity value to the name beyond how much it actually earns.

On the negative side, maybe this is too high an appraissal. Maybe a revolutionary technology ends domain name use in 3 years or severely changes it. Maybe the internets vulnerability as a market form to a terrorist attack or some other force changes value in a negative way.


Its difficult to say how much it is worth.

But you are looking for a more sophisticated financial analysis based on time I guess.

 

[Tee]

One could argue that the value of this name increases day by day, minute by minute, year by year due to an increasing internet population etc, but I say new tlds and future uncertainty about the internet and domain names cut into that enough to negate an increasing value - at least theoretically - without seeing some numbers so a trend can be seen.

 

[Ed30]

Originally posted by Tee
I've read that sex.com makes anywhere from 36 million a year to 100 million year.

I think that is a vast overexaggeration - don't believe everything you read.

 

[DomainAppraiser]

C

You are still at a C, when taken cumulatively with your other posts. What I am looking for is a financial analyis... hint - use present value calculations with your assumptions - and you could push this into B level.

Originally posted by Tee
One could argue that the value of this name increases day by day, minute by minute, year by year due to an increasing internet population etc, but I say new tlds and future uncertainty about the internet and domain names cut into that enough to negate an increasing value - at least theoretically - without seeing some numbers so a trend can be seen.

 

[Tee]

I dont believe all that I read. My feel is that it makes about 30 million a year. I've read in a few places 65 million. But who knows?

But it doesn't matter really. Da is looking for mechanics of evaluations, not real numbers (I think).

Its too complicated for me. It would probably involve how much the money cost the buyer to get. I believe it would involve interest rates, inflation and accounting stuff.

In any case, that's one expensive name!

 

[Tee]

Just one last stab. What ever the price, let's say:

a figure believed to be yearly income x some number of years + a prestige or vanity fee (it' s sex.com after all)

+ any associated finance fees with the loans you will have to take to get the money to pay for the name.


it would be cost of name + interest ?

 

[NameCaster]

Unless your still living in the 1998-2000 years.

Internet business's are usually valuated using the "Market Data Approach".

Formula: annual earnings/capitalization rate = market value

Note: Capitalization rate is a multiplier or divider used to convert an income stream to an indicated value.

For example, if several comparable businesses sold for prices which ranged from 3.2 - 5 times earnings, the capitalization rate would be 1 divided by 3.2 equals .313 and 1 divided by 5 equals .20.

The upper limit of the range would be 31.3% and the lower would be 20%.

Deciding between 31% and 20% is based on the risk involved in the investment.

The risk involved is determined by looking at the type of business and the economic market at the time of the purchase.


If an investor wants a return of 25% on his investment, then he would be willing to invest $40,000 in a business that has expected earnings of $10,000.


In this case:
Low ball:$36M per year = 115,20000
High ball:$36M per year = 180,00000

Low ball:$100M per year = 320,00000
High ball:$100M per year = 500,00000


From looking at the site. Its obvious that the income generated is from affilates or other outside sources etc.

This leads me to believe that the actual domain is worth more than the current site.

Also, if this site is turning $36-$100M a year you would think this person would have enough money to hire a professional web developer.

Thats my story and I'm stickin with it

Cheers!

 

[Tee]

I believe the value is all in the name.

Its the name and traffic it gets. Not the site imo.

 

[Tee]

If the 212k searches for " sex com" at overture and 2.8 million searches for " sex" at overture is any relative indication, sex.com must be getting slammed with typeins alone, forget about se traffic.

You could probably sell laundry detergent from that url and make some nice money.

 

[NameCaster]

dido Tee.

"This leads me to believe that the actual domain is worth more than the current site."

I could have phrased that a little better.
I should have said the actual domain name is the site worth.

Cheers!

 

[DomainAppraiser]

Originally posted by mudfence
Unless your still living in the 1998-2000 years.

Internet business's are usually valuated using the "Market Data Approach".

Formula: annual earnings/capitalization rate = market value

Note: Capitalization rate is a multiplier or divider used to convert an income stream to an indicated value.

For example, if several comparable businesses sold for prices which ranged from 3.2 - 5 times earnings, the capitalization rate would be 1 divided by 3.2 equals .313 and 1 divided by 5 equals .20.

The upper limit of the range would be 31.3% and the lower would be 20%.

Deciding between 31% and 20% is based on the risk involved in the investment.

The risk involved is determined by looking at the type of business and the economic market at the time of the purchase.


If an investor wants a return of 25% on his investment, then he would be willing to invest $40,000 in a business that has expected earnings of $10,000.


In this case:
Low ball:$36M per year = 115,20000
High ball:$36M per year = 180,00000

Low ball:$100M per year = 320,00000
High ball:$100M per year = 500,00000


From looking at the site. Its obvious that the income generated is from affilates or other outside sources etc.

This leads me to believe that the actual domain is worth more than the current site.

Also, if this site is turning $36-$100M a year you would think this person would have enough money to hire a professional web developer.

Thats my story and I'm stickin with it

Cheers!