By Brian Lantier, CFA
NASDAQ: MKTW
READ THE FULL MKTW RESEARCH REPORT
MarketWise (NASDAQ: MKTW) is a digital platform that provides financial research, news, quantitative analytical tools, and investment education to investors.
Today, the company has grown to more than 450 employees and, through multiple customer-facing brands, a team of analysts and editors provides institutional-quality research, financial analysis software tools, and market updates. Through 9 unique brand offerings, MarketWise offers 20+ free products and more than 100 paid products covering topics such as value investing, growth, commodities, biotech, mutual funds, options, and trading.
The majority of the company’s published research is distributed monthly, although we’ve noted that some of the more trading-oriented publications are sent out more frequently. The company’s subscriptions range from around $100 per year to over $5,000 per year for premium research services. Marketwise has significantly increased investments in analytical software and tools over the past few years, and roughly half of the company’s revenue today comes from these offerings.
Investment Highlights
- MarketWise operates a high-margin model that continues to generate significant cash flow. MarketWise's costs are primarily limited to customer acquisition and content creation, as digital distribution of content is virtually free. Over the company's long operating history, it has continuously generated strong margins, operating income, and significant free cash flow.
- The pivot toward higher-value subscribers remains on track. MarketWise is in the midst of a strategic shift away from lower-priced, entry-level newsletters toward higher-priced targeted research and software tools. While this has led to a decline in revenues and total subscribers, we believe this is a temporary issue, and the strategy is already having the desired effect, as the company's average revenue per user (ARPU) increased roughly 70% in 2025 to $670.
- The subscriber base appears to have stabilized, and billings growth in 2025 should provide financial tailwinds. After peaking in 2021 at roughly 1 million subscribers, paid subscribers continued to decline in 2025 (down 26%) due to a strategic decision to shutter a former division and shift the company's focus to higher-value subscribers. The subscriber runoff seems to have stabilized in the second half of 2025 at 374,000. The company's billings in 2025 were up 13%, which should drive strong results in 2026 and 2027.
- MarketWise's cash flows and financial condition are remarkably strong. The company generated $46 million in operating cash flow in 2025, had no debt, and held $70 million in cash on the balance sheet as of 12/31/25. Additionally, the company has a strong track record of paying dividends to holders of its Class A common stock, and it has indicated its intention to pay regular and special dividends totaling $1.80/share in 2026.
- Past missteps continue to be an overhang on the stock, creating opportunity for patient investors. The shutdown of Legacy Research continues to linger in investors' minds, and the industry as a whole continues to face skepticism from more traditional content providers. We believe this overhang presents an opportunity for patient investors to invest at a compelling valuation.
- We are establishing a target of $24/share. While we feel it is unlikely that MarketWise would be assigned premium valuations like other market data providers, we believe that in our base case, the company can close the valuation gap a bit, assuming billings remain strong and the company turns the corner on revenue declines. Assuming that the market recognizes these shifts in MarketWise's business, we believe the company's P/E ratio based on our 2027 earnings estimate of $3.36/share could rise from the current 5.1 times to 7 times, which produces our 12-month target of roughly $24/share.
We would encourage investors to read our full initiation report on MarketWise to get a complete picture of the opportunities and challenges facing the company.
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