Look, I think we can all agree that Kylie Jenner’s personal finance status isn’t the most important story in the world today. There is a pandemic. Unarmed black men are murdered by cops. The President of the United States attacks Twitter on Twitter… Frankly, I don’t really want to write a 3,000-word victory lap on the bad cover of Forbes on Kylie Jenner’s Equity. But I have to admit that I feel extremely justified today. So I’m going to write a 2000 word victory lap ?
In the past two years, CelebrityNetWorth has drawn a ton of warmth for calling Kylie Jenner’s Forbes blanket. Whenever Forbes published a glowing story about Kylie, we quickly refuted. I did interviews where I called their mathematics, point by point.
Many people have called us hateful and questioned our credibility. “If Forbes says someone is a billionaire, it must be true!“is a refrain that we have heard quite frequently.
It turns out that Forbes crowning someone billionaire might not be entirely believable after all. You just have to ask Elizabeth Holmes.
But let’s go back for a moment. When did it all start?
July 11, 2018
That day, Forbes released a digital version of an upcoming cover titled “How 20-year-old Kylie Jenner built a $ 900 million fortune in less than three years“The article praised:
“What her stepsister Kim Kardashian West did for the booty, Jenner did for full lips. Like Kardashian West, she leveraged her assets to earn both fame and money. But while her sister is best known for the first, Jenner was skillful in the second. Historically.“
“Kylie Cosmetics launched a $ 29 “lip kit” two years ago with a matching set of lipstick and lip pencil, and has sold more than $ 630 million in makeup since, including $ 330 million. dollars in 2017. Even using a multiple preservative, and applying our standard 20% discount, Forbes values its business, which has since added other cosmetics like eyeshadow and concealer, almost of $ 800 million. Jenner owns 100%.“
“… She is cautiously worth $ 900 million, which, with her age, makes her the youngest person in the fourth annual ranking of the richest self-taught women in America.“
Was Kylie Cosmetics worth $ 800 million? Kylie is personally worth $ 900 million?
These “facts” certainly raised eyebrows here at the CelebrityNetWorth headquarters.
Before the publication of Forbes’ article, we estimated Kylie’s net worth at $ 150-200 million. Outside of this range, about half of his net worth was attributable to the value of Kylie Cosmetics according to the information and figures we had seen. Forbes suddenly claimed that Kylie Cosmetics was worth $ 900 million. Nine times our own calculations. So we dug out the numbers. Our research resulted in the publication of this rebuttal article on the same day, July 11, 2018:
To summarize, Forbes claimed that Kylie Cosmetics was worth $ 800 million because it had generated $ 330 million in revenue in 2017 with $ 100 million in profits.
My first problem was that Forbes was applying a multiple of 8 times its profits to a brand new business that was not at all in line with industry benchmarks. Private technology companies sell for 8-10 times more profit. Unproven makeup companies that are less than two years old certainly don’t.
Second, Forbes’ own reports have shown that sales of Kylie Cosmetic were essentially tanking. In mid-2017, Kris Jenner told Forbes that Kylie Cosmetics is on track to make $ 400 million in sales for 2017. Well, they actually made $ 330 million. Forbes said Kylie Cosmetics revenue in 2017 was only 7% higher than in 2016 and that sales of its flagship lip product were down 35% year over year.
If we are generous and believe that the figures provided by Kris Jenner, we are talking about a company that missed its revenue targets of $ 70 million, ended up showing extremely low growth while seeing its main product line TANK 35%. Why the hell would someone pay an extremely high multiple for the company I just described?
Our conclusion of July 2018:
“A more reality-based multiple would be 3-4X profit. Using 4x, if someone bought Kylie Cosmetics, it will sell for $ 400 million. After Kylie donated 20% to the US Treasury for profits in long-term capital and 13% to the California Franchise Tax Board, she would have $ 268 million left. We estimate that Kylie’s non-cosmetic assets are worth $ 40 million, not $ 100 million, which means that after a sale, she would end up with a net worth of $ 300 million. Using a 3X sales multiple, she would end up with a $ 240 million net value. “
March 5, 2019
That day, Forbes released its annual list of the 400 richest Americans. Not surprisingly, they decided to put Kylie Jenner on the cover with a salacious title claiming that she is now “officially” billionaire. I mean, who wouldn’t click on this article or buy this magazine cover? It is so good. But is it too good to be true?
True to our arms, we retaliate the same day with the following article:
Once again, we present a clear argument based on numbers showing that Forbes took a few pieces of unverified anecdotes from Kris Jenner and massaged them into a shocking title solely for the purpose of selling magazines, attracting people ‘attention, backlinks … page views, etc.
*** Please also note that Kylie was quick to share Forbes articles on her various social platforms, which, I am sure, generated unfathomable traffic ***
November 18, 2019
On that day, it is announced that Kylie sold 50% of her business to Coty Inc. for a declared value of $ 1.2 billion. Honestly, we felt pretty stupid and we have to eat crow with the following article:
Kylie is said to have received $ 600 million in cash for a 51% stake, which represents approximately $ 340 million after-tax. When you combine $ 360 million + $ 50 million in external wealth and her remaining $ 588 million stake in Coty, Kylie was worth $ 998 million. Not quite a billionaire, technically, but essentially a rounding error at this point.
May 29, 2020
After nearly two years of being called a hater and feeling like the only sane person on the planet, Forbes today publishes an article titled:
“In Kylie Jenner’s Web of Lies – and why she is no longer a billionaire”
In short, we were right all along. Forbes admits that all of the figures provided to them by Kris and Kylie in previous years were either inflated or completely wrong.
Forbes goes so far as to accuse the duo of presenting them with “false tax slips” to prove the inflated profits and net worth. (A JUSTE family lawyer denied this claim and demanded that Forbes retract this claim).
Some other fun facts we learned from the Forbes retraction article:
- The 2018 article claimed that Kylie Cosmetics generated between $ 300 million and $ 400 million in annual revenue with $ 100 million in profits. In fact, according to a financial presentation from Coty Inc, Kylie Cosmetics generated $ 125 million in 2018 and $ 177 million in 2019. Big numbers, but literally half of what Kris Jenner claimed in numerous interviews.
- Kylie said her skin care line, launched in May 2019, had generated $ 100 million in its first 45 days. In reality, the filings show that the line was actually “on track” to end the year with just $ 25 million in sales.
- Kylie did not own 100% of the business, her mother owned 10%. So his actual cut from the Coty sale was a little smaller than we all thought.
- Data from e-commerce company Rakuten, which tracks a number of receipts, suggests a 62% drop in Kylie’s online sales between 2016 and 2018.
Here is my favorite paragraph:
“The business was never bigger at first, and the Jenners have been lying every year since 2016 – including having their draft accounting tax returns with false figures – to help estimate Forbes’ estimates of revenues and Kylie’s equity. Although we cannot prove that these documents were false (although this is likely), it is clear that Kylie’s camp lied.“
Let me repeat these three lines because they are glorious:
The company has never been bigger at the start, and the Jenners have been lying about it every year since 2016.
… Including the fact that their accountant writes false tax returns – to help Forbes’ estimates assess Kylie’s income and net worth.
Although we cannot prove that these documents were false (although this is likely), it is clear that Kylie’s camp lied.
So what net worth of Kylie Jenner today?
Aside from all this bullshit, Kylie made a load of verifiable money through the Coty sale. Coty even confirmed that the sale was entirely in cash in an SEC file.
She didn’t do as much as we all thought! As we mentioned in the points above, Kylie did not own 100% of its business. According to Forbes, Kris held 10%. When they sold 51% to Coty, Kylie brought in around $ 340 million in after-tax cash and maintenance, up from $ 360 million previously reported. It also still holds a 44% stake in the brand, compared to 49% previously.
How much is this 44% stake worth today, knowing everything we now know about the brand?
Take a look at Coty’s share price in the past 12 months:
This is a 70% drop in the share price since the day of the acquisition of Kylie Cosmetics. Today Coty’s total market capitalization is $ 2.77 billion. This means that when you add up the dozens of brands operated by Coty, they are all worth a total of $ 2.77 billion.
Coty all but admitted that he had paid too much for Kylie Cosmetics. If I were a betting man, I would bet my lowest dollar that Coty will soon reduce the value of Kylie Cosmetics.
In other words, there is absolutely no chance that Kylie Cosmetics is worth $ 1.2 billion today. I would bet it is worth a tiny fraction of that amount.
Let’s say that Coty reduces the value of Kylie Cosmetics by 50% (always an extremely high multiple for what seems to be a dying fashion brand). The remaining 44% stake in Kylie’s paper would be worth $ 264 million before tax, about $ 175 million after tax.
Here is what we think is a reasonable current valuation of Kylie Jenner’s current net worth:
- $ 100 million “other” assets (real estate, cash, investments, intellectual property)
- $ 340 million in cash from the sale of Coty
- $ 175 million remaining
= $ 615 million
We have in fact chosen to round up to $ 700 million because we cannot say with certainty where Coty currently values the brand. Maybe a 50% reduction is far too severe?
Here is the full statement from Kylie’s lawyer Michael Kump:
“We looked at Forbes’ article accusing Kylie of deception and a “web of lies” to inflate her net worth. The article is full of lies. Forbes’ accusation that Kylie and her accountants “falsified tax returns” is unequivocally untrue and we ask Forbes to immediately and publicly withdraw this and other statements. Sadly, Forbes dedicated 3 journalists to investigate the effects of the coronavirus crisis on Kylie’s equity. You wouldn’t expect that from a supermarket tabloid, let alone from Forbes.“
Here’s what Kylie posted on Twitter (grammar is not edited):
“to what I wake up even. i thought it was a reputable site .. all i see is a number of inaccurate statements and unproven assumptions lol. I never asked for a title or tried to lie. period. Even by creating tax returns that have probably been tampered with, is that your proof? then you THINK they were forged? as actually what I read … but okay. I am blessed beyond my years, I have a beautiful daughter and a successful business and I am doing very well. i can name a list of 100 more important things right now than fixing on how much money i have.“
And since I am 1934 words against the 2000 words promised. I leave you with the following:
Kylie Jenner is very rich but she is not a billionaire. Don’t believe everything you read on Forbes. Obviously, this is a stupid question and there are far greater concerns around the world.
I hope you all have a wonderful and peaceful weekend.
Stay thirsty my friends.