Marketwise: Up-C Structure, Class A Economics, and an Appeal to Management

Continuing Coverage | October 2025

Disclaimer: Not financial advice

Marketwise screens optically cheap on consolidated numbers, but valuation must be reframed through the lens of fully-exchanged, Class A cash flow. Structure matters — and unless buybacks are paired with exchanges, the public float accrues less than it appears. The path forward is clearer disclosure, disciplined capital return, and execution against defined KPIs.

We are long Marketwise, as revealed in our initiating coverage report. The business is fundamentally capital-light, with a significant base of recurring revenue and ~$393M in deferred revenue. Mgmt guides to ~$250M in FY25 billings and ~$30M in FCF, implying ~12% FCF yield on a fully-exchanged basis.

However, the Up‑C structure, tax distribution waterfall, and current buyback mechanics significantly reduce the actual economic benefit accruing to Class A shareholders. Our investment lens is built around three pillars:

1. Underwrite on a fully-exchanged, Class A cash basis — not consolidated optics.

2. Redesign capital return mechanics to prevent dilution of Class A ownership through buybacks.

3. Track performance against KPI thresholds that demonstrate improved acquisition efficiency and retention — necessary for sustainable FCF compounding.

As of Q2 2025, MarketWise Inc. (Class A) owned ~14.8% of the operating LLC. The rest (~85.2%) is held by insiders via LLC units and Class B shares.

The gap is clear: the majority of cash flow leaves the system via tax and profit distributions to NCI, not to the public float. This makes fully-exchanged economics — not float-based per-share metrics — the only reliable valuation lens.