🤳 The Insane Economics of OnlyFans

MARKET UPDATE

Good Morning Investor! On Monday, shares of Trump Media ($DJT) shot up over 6% after a new national poll on Sunday showed Trump and Democratic nominee Kamala Harris neck and neck in the race for the White House.

TODAY’S BIG HEADLINES

How Wikipedia Got So Rich

Ticketmaster’s Demand-Based Pricing Sparks More Trouble

The Insane Economics of OnlyFans

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EDUCATION & ECONOMICS

How Wikipedia Got So Rich🤔

Begger’s Fortune: Ever been deep-diving into the rabbit hole of late-night research only to stumble upon Wikipedia? If so, you've probably been bombarded with more donation requests than a street corner during rush hour. With phrases like "we aren't for sale" and "please don't scroll," you'd think poor Wikipedia was about to start selling pencils from a tin cup. But this tale of internet poverty is more fictional than your average politician's campaign promises.

The Encyclopedic Empire: The encyclopedia site which was founded back in the digital dark ages of 2001, today boasts a worldwide userbase a userbase that would make Mark Zuckerberg green with envy, and is one of the most visited sites in the world. As of summer of 2024, Wikipedia even racked up 6.7 billion monthly visits per month, largely thanks to its 61 million articles (6.8 million of which are written in English). It's like the Library of Alexandria decided to go digital.

Panhandling Paradise: Interestingly, since its inception over two decades ago, the site has never made a cent off of advertising on its site. Instead, it's been living off the kindness of strangers like a digital Oliver Twist. These donations go straight to the non-profit organistaion called Wikimedia Foundation (WMF), which runs the site with all the efficiency of a squirrel managing a nut warehouse. The foundation launched its first ever fundraising campaign in 2005 — just 4 years after the site’s inception. The initial campaign’s target was $75,000, and the WMF managed to raise $94,648.

• Fast forward a few months, and they're asking for $200,000. It became clear they'd struck gold, and fundraising campaigns started popping up more often than dad jokes at a family barbecue.

• Wikipedia grew at such an astounding rate that their costs did genuinely skyrocket, and by 2013, the deputy director estimated that their operating costs were sitting at ~$10 million.

From Rags to Riches: Wikimedia is now sitting prettier than a cat in a sunbeam. In fiscal 2022/23, they raised $165 million from over 13 million donations — $148 million of which came solely from the US and Europe. With $255 million in net assets, they're not just flush; they're practically drowning in cash.

• In addition to this stockpile, there’s the Wikimedia endowment fund which manages $120 million. The fund’s mission? to ensure access to information for future generations. But as of right now, these are just more investments in assets like stocks, aimed at generating profits.

• Unsurprisingly, the WMF already has enough money to maintain the servers for Wikipedia for well over 100 years.

Follow the Money: So where's all this cash going? Well, with 700 staff members, Wikimedia spent $100 million in 2023 on salaries and benefits. That's a lot of lattes and ergonomic chairs! Meanwhile, only $3.1 million went to actually hosting Wikipedia. $24 million was also spent on awards & grants. But perhaps the most unexpected move was the foundation’s decision back in 2021 to launch a for-profit company dubbed “Wikimedia Enterprise“ which is meant to help big tech companies more easily access content on Wikipedia — a stroke of genius given the rise of LLMs.

EVENTS & CONSUMER DISCRETIONARIES

Ticketmaster’s Demand-Based Pricing Sparks More Trouble🎫

Ticket to Ride (the Rollercoaster of Emotions): Remember when Swifties went nuclear after Ticketmaster's presale fiasco, causing more drama than a Taylor Swift breakup song? Well, folks, Ticketmaster's back at it again — but this time, they've hopped across the pond, and the audience is old enough to remember when MTV actually played music videos. Fans of '90s Britpop band Oasis (yes, the band that's been on a hiatus longer than some of their fans have been alive) logged on for presale tickets, only to be hit with a surprise more shocking than finding out Liam and Noel actually get along: ticket prices skyrocketed during checkout.

• Ticketmaster reportedly used "dynamic pricing," a term that sounds about as friendly as a hungry shark. Tickets advertised at £148 ($195) suddenly ballooned to £485 by checkout time, leaving fans feeling deflated.

• Further stoking the flames like a pyromaniac at a bonfire, a representative for Oasis said the band "at no time had any awareness that dynamic pricing was going to be used," effectively throwing Ticketmaster under the double-decker bus and cementing them as the clear villain in this comeback story.

Spotlight on the Naughty Step: After initially staying silent, Ticketmaster told the New York Times on Friday that it does not have "algorithmic surge pricing technologies." This statement contradicted an earlier comment made by Live Nation ($LYV) CEO Michael Rapino in February. Regardless of who's telling porkies, Live Nation (Ticketmaster's parent company) now faces a UK regulatory investigation into what caused the price jumps. This is just another day at the office for the company, which has been at the center of more high-profile ticketing issues than a toddler has tantrums, involving everyone from Swift to Springsteen to Beyoncé. It's like they're collecting celebrity complaints like Pokemon cards. Last week, $LYV plummeted 5% on the news.

MEDIA & CONTENT CREATION

The Insane Economics of OnlyFans🤳

The Bare Necessities of Success: The simp economy is in full swing, like watching Tiger Woods in his prime, but with fewer golf clubs and more credit card swipes. How can we tell? OnlyFans - a platform more synonymous with "risky" adult content than a nudist beach is with sunburn - is breaking records. Based on its latest company filings, it's probably the most successful UK export since fish and chips, making its owner richer than ever.

• Though a private company (ironically, given its content), Felix International ("OnlyFans") is a UK company and therefore required to publicly disclose certain information pertaining to its business and operations. It's like a financial striptease, if you will.

• According to a filing, Radvinsky, the sole owner of OnlyFans, paid himself $472 million in dividends last year. He's made more than $1 billion over the past three years and pocketed most of OnlyFans' $485 million 2023 profit.

When Numbers Get Naughty: That's right, OnlyFans is arguably the most successful creator platform out there right now, driven by zero venture capital and 100% pure, unfiltered thirst. In 2023, OnlyFans creators received a stunning $5.3 billion in payouts. As a point of comparison, total NBA salaries during the 2023-2024 season was $4.9 billion - proving that dribbling skills aren't the only thing that pays these days. OnlyFans takes a 20% fee from their earnings, which is less than what most strip clubs take, if you're wondering. OnlyFans' operations are so lean they'd make most elite boutiques jealous - only 41 employees work for OnlyFans.

• In 2024, OnlyFans generated $6.3 billion in gross revenues, up from $300 million five years earlier. Revenues in FY 2023 grew 19% (or $1.1 billion) year-over-year, three percentage points greater than 2022 (which grew $754 million). Two thirds of revenues are from users in the United States, while the UK plus Europe is another 16%.

Climbing the Pole Position: Though OnlyFans is based around subscriptions, over 60% over consumer spending is now via transactions. subscription revenues are up only 9% since 2021 (or $227 million) whereas transactional spending is up 70% (or $1.6 billion), representing 88% of total growth. OnlyFans revenues are now believed to be twice that of pornography giant Aylo (formerly known as MindGeek), which owns PornHub, Brazzers, RedTube, YouPorn, and XTube, and the platform counts over 300 million registered users.

• OnlyFans made its name serving as a platform for risky adult content that other websites wouldn't touch with a ten-foot pole. However, the company has been expanding its base and recruiting personal trainers, chefs, and comedians. Soon, you might be able to learn how to perfect your soufflé and your dad jokes on the same platform where you... well, you know. Talk about a one-stop shop for all your needs!

MORE NEWS

Additional market-moving events🌎

EV Slowdown Hits Sweden: Northvolt, one of Europe’s most valuable privately-held tech firms building lithium-ion batteries for the electric vehicles announced it will be laying off staff in huge cost-cutting drive. (CNBC)

Apple’s Latest Refresh: Tech giant Apple unveiled the new generation of its devices including Iphone 16, Airpods 4 and more. (The Verge)

Boeing Updates: Boeing ($BA) rose 3% premarket after reaching a tentative union agreement, offering a 25% wage increase over 4 years to over 33,000 workers and a pledge to build its next commercial airplane in the Pacific Northwest. (Reuters)

News Corp's Murdoch Challenge: Activist investor Starboard Value has filed a shareholder resolution to dissolve News Corp's (NWSA) dual-class share structure, challenging the Murdoch family's control. Rupert Murdoch currently holds 40% voting power. (Reuters)

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Our selections performance👾

On Monday the 11th of March, we released our “superperformers” stock pick which we believe will provide significant outperformance compared to the S&P 500. Then on the 14th of June we released our next stock selection. Lastly, on August 6th, we initiated a position in Celsius holdings.

Here’s how the stocks have performed since:

• Hims & Hers Health: $13.83 (📉-4.42%)

• PayPal: $69.70 (📈+14.94%)

• Celsius: $33.54 (📉-16.94%)