Internet valuations can perplex even the most sophisticated investors--Warren Buffett famously doesn't mess around in cyberspace. Companies with meager or no earnings are routinely given multibillion dollar valuations based on eyeballs, user adoption, hocus pocus and other metrics that sometimes pan out, and sometimes don't. But some Internet phenomena make big bucks right off the cat--er, bat--and Grumpy Cat is one of them. Grumpy Cat has earned her owner $99.5 million over two years, according to the Telegraph, which compares Grumpy Cat's earnings to other celebrities like Gwyneth Paltrow, who reportedly made $18.6 million last year.
Internet companies tend to trade at a prices-to-sales valuation multiple of 10.5x, with some companies exceeding the 20x figure. It's certainly a stretch to call Grumpy Cat an Internet company--although Grumpy Cat's fame is purely an Internet phenomenon. But if you take the 20x multiple so common to Internet ventures (many are valued higher) and factor it with Grumpy Cat's average earnings of $50 million a year--you have a $1 billion valuation for the discontented kitty. When you consider the infrastructure costs, which are near zero, that multiple might be even higher. There's also the breeding aspect--how many Grumpy Cats could the company produce? (We're talking Silicon Valley, so cloning is an option.) Look out for the Grumpy Cat IPO!
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