Ancestry subscribers stick around for 17 years — LOL — a big oops for MadMoney

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Ancestry.com, which will trade under the ticker symbol ACOM, runs a subscription-based genealogy site. The company digs through billions of historical records to help subscribers name the branches on their respective family trees. While the venture may seem boring to the younger social-media set, a million people are willing to pay for the service.

And still more are signing up. Subscriptions are growing at a rate of 11%, with an average monthly fee of $16.50. Two-thirds of the subs are annual, though, and 38% of the site’s clients pay up for a premium package. Lifetime revenues per subscriber come in at $300, meaning that these people stick around for over 17 years. That explains the low 4% churn rate, which dwindles to 2% for Ancestry members who’ve stuck around for two or more years.

One of the worst pieces of financial journalism I have ever seen. Speaking of Ancestry subscribers:

“…these people stick around for over 17 years.”

LOL. Yes, Ancestry has had subscribers for 17 years — since 1992, years before the internet was even invented. That’s how a lifetime value of $300 is calculated. 🙂

That’s what you get when you don’t realize that MONTHLY REVENUE is $16.50 per person — not ANNUAL REVENUE.

Seriously, someone ought to QA this kind of stuff before people go out and buy or sell stock on weak analysis like this.

Posted via web from Paul’s posterous

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1 Response

  1. paulballen

    So Cramer himself is pretty eloquent about describing the Ancestry.com opportunity, with their potential market penetration in the US above 45 market and the international opportunity.

    Someone else must have interpolated the “stick around for 17 years” stuff, because he didn’t say anything like that in the actual video.

    And yes, I need to correct my statement about the internet not being invented back in 1992. What I meant was the “web” as we know it wasn’t around back then. The internet technically dates back to 1969.

    I should add one more comment — it’s pretty amazing for me to watch the Jim Cramer touting the Ancestry.com IPO. I have watched Jim for many years and I respect him for his encyclopedic memory. I even read his autobiography, Confessions of a Street Addict — http://www.amazon.com/Confessions-Street-Addict-James-Cramer/dp/0743224876

    I love his insistence that every investor read quarterly reports, annual filings, and participate in earnings calls for EVERY stock they own. He and Warren Buffett seem to agree on that one point, even though they seem to be polar opposites on every one–especially on style and investing velocity.

    My “worst financial journalism” comment only applies to the “17 years” oops. That is all.

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