The Knot: Can This Stock Be Saved?

Since I’m getting married later this year, it seems fitting to talk about
The Knot . Actually, I
never realized how complex a wedding can be – as well as expensive! And,
yes, I’ve been a frequent visitor of theknot.com.

The company is a pioneer of the online world, founded in 1996. Of course,
two of the founders had recently had weddings.

The company was smart with its investment partners. The original investor
was AOL. Since then, the company received money from Hummer Winblad and
QVC.

The marketplace is, of course, huge. About $70 billion was spent on
weddings in the U.S. last year, with $19 billion spent on wedding gift
registries. In all, about 2.3 million couples get married every year. Then
there are the spin-off businesses, such as honeymoons ($8 billion last
year).

As for the Knot.com, the site looks great. It is easy to navigate and the
content is engaging.

Financials? Well, the company is growing. In the past quarter, revenues
were $6.9 million. Although, the company got a nice boost from the
Weddingpages acquisition, which added revenues of $4 million. Excluding
these revenues, The Know had revenue growth of 631% from the same period a
year ago. Losses in the past quarter were $3.8 million.

Recently, the company exceeded 1 million registered users. Moreover, the
site is averaging 22 million monthly page views.

Actually, The Knot has been aggressive with its acquisitions. The
Weddingpages acquisition is the fifth acquisition so far. With valuations
low and the funding environment tough, The Knot has the advantage of
consolidating the industry.

The company has been creative with site promotion. For example, the company
has recently announced a new contest. The winner gets a dress that has the
same look as the one Jennifer Aniston had when she married Brad Pitt. It is
a Lawrence Steele Grown with a price tag of about $52,000.

Earlier this year, I wrote a negative piece on The Knot. Since then, the
company has sunk to a very low valuation: $44 million (of which about half
is cash). But with the company carving a dominant position in its space,
the valuation does look attractive at these levels.

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