Wayfair WACC - Weighted Average Cost of Capital
The WACC of Wayfair Inc (W) is 8.2%.
| Range | Selected | |
| Cost of equity | 7.7% - 12.0% | 9.85% |
| Tax rate | 1.1% - 1.6% | 1.35% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 6.3% - 10.1% | 8.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.83 | 1.27 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.7% | 12.0% |
| Tax rate | 1.1% | 1.6% |
| Debt/Equity ratio | 0.59 | 0.59 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 6.3% | 10.1% |
| Selected WACC | 8.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| W | Wayfair Inc | 0.59 | 2.45 | 1.55 |
| BGRP | Bluestem Group Inc | 259.63 | 1.02 | 0 |
| EBAY | eBay Inc | 0.22 | 0.44 | 0.36 |
| ETSY | ETSY Inc | 0.41 | 0.41 | 0.29 |
| GRPN | Groupon Inc | 0.21 | 1.5 | 1.24 |
| LEJU | Leju Holdings Ltd | 0.05 | 1.56 | 1.49 |
| PDD | Pinduoduo Inc | 0 | 0.78 | 0.77 |
| PTS.TO | Points International Ltd | 0 | 1.62 | 1.62 |
| QRTEA | Qurate Retail Inc | 46.23 | 0.94 | 0.02 |
| REAL | RealReal Inc | 0.69 | 1.79 | 1.07 |
| VIPS | Vipshop Holdings Ltd | 0.04 | 0.56 | 0.54 |
| Low | High | |
| Unlevered beta | 0.54 | 1.07 |
| Relevered beta | 0.75 | 1.4 |
| Adjusted relevered beta | 0.83 | 1.27 |
Wayfair'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 Wayfair:
cost_of_equity (9.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.83) + 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.