RENN WACC - Weighted Average Cost of Capital
The WACC of Renren Inc (RENN) is 6.4%.
| Range | Selected | |
| Cost of equity | 6.2% - 8.5% | 7.35% |
| Tax rate | 1.8% - 2.4% | 2.1% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 5.1% - 7.7% | 6.4% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.0% | 6.0% |
| Adjusted beta | 0.41 | 0.55 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.2% | 8.5% |
| Tax rate | 1.8% | 2.4% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 5.1% | 7.7% |
| Selected WACC | 6.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| RENN | Renren Inc | 0.89 | 0.36 | 0.19 |
| CALI | China Auto Logistics Inc | 3.65 | 0.91 | 0.2 |
| DIV.TO | Diversified Royalty Corp | 0.53 | 0.57 | 0.37 |
| GACR | Green Automotive Co | 1690.31 | -1457.38 | -0.88 |
| KXIN | Kaixin Auto Holdings | 0.85 | 0.05 | 0.03 |
| LAZY | Lazydays Holdings Inc | 4.84 | 1.63 | 0.28 |
| LMPX | Lmp Automotive Holdings Inc | 4.05 | 1.68 | 0.34 |
| SPMI | Speedemissions Inc | 41.1 | 150.82 | 3.66 |
| 1293.HK | Grand Baoxin Auto Group Ltd | 31.07 | 2.02 | 0.06 |
| 1728.HK | China ZhengTong Auto Services Holdings Ltd | 58 | 1.74 | 0.03 |
| 600297.SS | China Grand Automotive Services Group Co Ltd | 9.79 | 1.24 | 0.12 |
| Low | High | |
| Unlevered beta | 0.12 | 0.2 |
| Relevered beta | 0.12 | 0.33 |
| Adjusted relevered beta | 0.41 | 0.55 |
RENN's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for RENN:
cost_of_equity (7.35%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (0.41) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.