It makes a certain amount of sense. The Huffington Post has raised $25 million at a valuation that the media is putting at $115 million. TheStreet.com (TSCM), which is public, has a market cap of $100 million, but it has $80 million in cash and marketable securities. In other words, it has a lot more money in the bank than Huffington does.
The company’s figures bear out the valuations to some extent, but the Huffington number says more about its future than it does its present.
According to both Compete and Alexa, Huffington has about twice as many unique visitors as TheStreet. Compete puts that number at 5.4 million for Huffington and 3.1 million for TSCM as of October.
TheStreet has several sites including MainStreet and Stockpickr, so in total its audience may be larger than Huffington’s. But, the markets don’t seem to think much of TSCM’s prospects. At $3.30, it trades at 1.4x revenue. With its cash backed out, the number is more like .3x sales. That is not much of a multiple for a company unless Wall St. thinks its growth stage is behind it.
TSCM is a $65 million a year operation which made $13 million last year. No public figures are available, but it is very unlikely that Huffington has revenue which even comes close to that.
But, Huffington has several important advantages over TheStreet. For starters, it does not rely on one person for most of its traffic. If Jim Cramer left TSCM, the company would be in real trouble.
Second, Huffington has diversified beyond it political news base. Over the next year or so, it will become clear whether that was a good idea or not. Adding “style” and “entertainment” sections puts it into competition with a lot of other online success stories.
Third, Huffington aggregates a lot of content from around the web. The cost of doing this is remarkably low. The company pays little if anything to most of its bloggers. TheStreet has a relatively large staff and produces most of its own content.
The final difference between the two companies is probably the most telling. At its current rate of growth, which could be hurt by the end of the 2008 election process, Huffington may double in size again over the next year or so, if its efforts to diversify its content works.
It would be hard to find analysts who believe TSCM is going to expand its audience or revenue at a rate of 100%.
Douglas A. McIntyre
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