The WACC of System1 Inc (SST) is 8.8%.
| Range | Selected | |
| Cost of equity | 5.30% - 17.20% | 11.25% |
| Tax rate | 3.20% - 8.20% | 5.70% |
| Cost of debt | 7.00% - 11.10% | 9.05% |
| WACC | 6.6% - 11.0% | 8.8% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.1 | 2.02 |
| Additional risk adjustments | 1.0% | 1.5% |
| Cost of equity | 5.30% | 17.20% |
| Tax rate | 3.20% | 8.20% |
| Debt/Equity ratio | 7.86 | 7.86 |
| Cost of debt | 7.00% | 11.10% |
| After-tax WACC | 6.6% | 11.0% |
| Selected WACC | 8.8% | |
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 SST:
cost_of_equity (11.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.1) + risk_adjustments (1.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.