Saturday, March 5, 2011

I Think Ancestry.com Stock Will Go Up

Ancestry.com seems to gain little recognition as a serious money-making business. This is understandable though, because such a service has never been offered before and people are reluctant to trust something new. But if it really can grow its profits, and people don't recognize this yet, then there's an opportunity to buy the stock now while it's cheap ($33.75 at the time of writing).

There's no need to prove selling genealogy information is a sound business plan because Ancestry.com is already profitable—and it has been for years. In fact, the company has already paid off all of its long-term debt. It is the largest company of its type and is the clear front-runner in this competition. Since it has already set itself up and put together a large database, it stands to reason that new subscribers will bring in more revenue but will not increase costs much. Does it really cost that much to let another subscriber access the database? The amount of money Ancestry.com can make seems to be limited only by the final number of people willing to pay for a subscription. The company's CEO, Tim Sullivan, said, "The real question is: Is this a 2 million, 3 million, 5 million or 10 million subscriber category?"

The final size of this market will be large because genealogy is a universal interest. Nearly every primitive society worshiped its ancestors, and this is evidence that the interest is biological and not cultural. One's ancestors are interesting because they are part of the puzzle of one's own origins and identity—and these questions are important to every thinking human in every culture. With this in mind, it's not all that surprising that people have described Ancestry.com's service as "addicting".

Disclosure: the author owns shares of Ancestry.com (ACOM)

2 comments:

  1. Job security, Food, Clothing and Shelter, Economy certainty are primary requirement of large number of unemployed in US and Europe. Once these needs are met then comes to Ancestry.com.


    Groupn.com will work now and even better economy.
    Match.com will work now even in better economy.
    Google Search will stay now and even when economy is far better.
    Craiglist.com will always be popular.
    eBay will be always stronger.
    Wal-Mart will do well at this economy

    Ancestry.com is a luxury that will do well when economy picks up wait until then.

    Asian’s know where they came from so don’t expect too much revenue from Asia.

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  2. Well Ancestry.com can still expand tremendously without any unemployed people signing up. That family history research is a luxury seems like a reasonable theory, but I don't see much evidence to support it. I think when financial times get tough people do tend to divide things into an essential and nonessential dichotomy, but I'm not sure where family history would fall. In any case, there are still plenty of people who can afford Ancestry even in bad times. There are not even 2 million subscribers yet.

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