The WACC of Vivid Seats Inc (SEAT) is 9.3%.
| Range | Selected | |
| Cost of equity | 17.30% - 38.20% | 27.75% |
| Tax rate | 7.30% - 21.20% | 14.25% |
| Cost of debt | 6.10% - 6.20% | 6.15% |
| WACC | 7.8% - 10.9% | 9.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 2.93 | 5.96 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 17.30% | 38.20% |
| Tax rate | 7.30% | 21.20% |
| Debt/Equity ratio | 4.51 | 4.51 |
| Cost of debt | 6.10% | 6.20% |
| After-tax WACC | 7.8% | 10.9% |
| Selected WACC | 9.3% | |
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 SEAT:
cost_of_equity (27.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (2.93) + 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.