

Report: Hulu Prepping To File For $2 Billion IPO - razin
http://techcrunch.com/2010/10/08/report-hulu-prepping-to-file-for-2-billion-ipo/

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stcredzero
I'm curious what an index consisting of stock whose IPO was mentioned on the
front page of HN would look like?

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chrisa
There have been many IPOs announced here which aren't trading yet (or the IPO
fell through), but here's a list of currently trading stocks which had an IPO
mention here (I've probably missed some):

Tesla, Green Dot, Orbitz, NetSuite, Alibaba.com, OpenTable, Rackspace,
COMSCORE, LogMeIn, Qlik Technologies, Blinkx, SolarWinds

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stcredzero
One should only count the IPOs that actually happen, I should think. One could
base an index on buying a set amount of IPO stock at market a set time
interval after the IPO. (3 business days?) I'm not sure how one should
calculate the index in the even of a purchase. Should one "sell" a
hypothetical amount of stock already in the index and use it to "buy" new
stock?

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AndrewJ
I'm considering buying in.

Anyone else?

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olegkikin
Why are you considering buying in?

Are you familiar with their financial situation? Do you know how much money
they make? I can't find any reliable numbers. This is the best I could find:

[http://www.businessinsider.com/hulu-ceo-talks-ipo--here-
are-...](http://www.businessinsider.com/hulu-ceo-talks-ipo--here-are-the-
financials-2010-7)

So their net profits are estimated $70M this year (before tax, I assume).

Their growth rate is the only thing that justifies 2B valuation.

So my main point is - we don't know enough to decide whether they are worth
that much.

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danahn
Following the numbers in that article here:

Say they're break-even on $70mm of annual revenue.

35% of annual revenue is gross profit - so of $70mm they keep $24.5mm - so say
that's their operating expense number.

I think you'd have to expect a 3-5x bump in revenue (assuming gross margin
stays the same and no significant growth in that operating expense number of
$25mm) to justify buying at a $2bn valuation.

4x revenue growth from $250mm expected this year = $1bn revenue

$1bn revenue * 35% gross profit margin = $350mm gross profit. $350mm - $25mm
operating expenses = $325mm pre-tax income. $325mm less 35% taxes = $210mm net
income.

Assuming they can keep up a steady growth rate at this point and you can value
Hulu at 15x their net income number, this implies a value of $3,150. Which is
about a 15% annualized return number over 3 years off a valuation of $2bn
today.

So some of the questions are - how much do you expect online TV to grow, what
percent of that market do you think Hulu will have, and successful do you
think Hulu Plus and any other initiatives will be, and do you think Hulu can
keep their operating expenses relatively flat?

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kloncks
It will be interesting if CBS decides to buy a big chunk of Hulu on the public
markets :)

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benologist
Nice to see TechCrunch got the memo about how to write like engadget ...
summarize someone else's article, link to 10 of your own.

Wonder when they'll tuck the source link away somewhere discrete.

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frederikfleck
Hulu IPO would be good sign for the markets. Amazing that they got this
shareholders together in the first place. But I wouldn't invest. Definitely
not for the long run. They will still be controlled by the large media
companies and if Hulu's profits rise they will just charge Hulu more for the
license. So Hulu's earning potential is limited.

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pitdesi
As is with the networks owning hulu, I can understand their incentive to make
hulu a destination site, so atleast they get a chunk of the revenue and not a
third part... as a separate public company they don't have this advantage so
it's dependent on Hulu's ability to lock up long-term contracts, which I'm not
sure they can do. This is a lot like Orbitz... originally started by a
consortium of TV companies/air carriers then went public

