The WACC of Weibo Corp (WB) is 6.5%.
| Range | Selected | |
| Cost of equity | 6.00% - 8.00% | 7.00% |
| Tax rate | 15.30% - 16.10% | 15.70% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.6% - 7.3% | 6.5% |
| Category | Low | High |
| Long-term bond rate | 1.3% | 1.8% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 1 | 1.01 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.00% | 8.00% |
| Tax rate | 15.30% | 16.10% |
| Debt/Equity ratio | 0.25 | 0.25 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.6% | 7.3% |
| Selected WACC | 6.5% | |
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 WB:
cost_of_equity (7.00%) = risk_free_rate (1.55%) + equity_risk_premium (5.20%) * adjusted_beta (1) + 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.