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lexa Internet, Inc.'s list of top 500 websites (www.alexa.com/topsites), both global and U.S. rankings, reveals a clear outlier - Wikimedia. The Wikimedia Foundation is a 501(c) (3) tax-exempt nonprofit organization with offices in San Francisco. The only nonprofit on Alexa's list, Wikimedia owns Wikipedia, among other projects (www.wikimediafoundation.org/wiki/Our projects).
The aim of this article is to explore the potential value of the Wikimedia Foundation. We hypothesize about what market price it could reach, if it were a commercial organization. We do this exercise under the strong belief that financial information does not properly reflect the enormous potential and the social contribution of this entity and its projects. This article is, therefore, a call for reflection on how far the global society could go in donations, to increase Wikimedia's possibilities and services worldwide.
We understand that, in its current legal form, Wikimedia cannot begin listing on any stock market. The idea is not really whether it should change its legal standing and go public but that it should be valued much more than it is by donors. We invite readers to think about the importance of entities such as Wikimedia, even if we do not have market prices with which to judge it.
CORPORATE VALUATIONS
When a company is publicly quoted, its value is determined both by market forces and by its own financial data. Market value comes from the market itself. A valuation resulting from supply and demand forces, it rests on investors' expectations. The price of a share of stock reflects what investors think the company is worth. Market capitalization plays a significant role in valuing a public company. To determine the market cap, multiply the price of a share by the number of shares outstanding, at a particular point in time.
Book value, on the other hand, rests on financial statements, or accounts. You can the calculate book value, also known as equity of the company, by deducting all liabilities from total assets. This book value is the result of applying accounting standards such as U.S. GAAP (Generally Accepted Accounting Principles) or IFRS (International Financial Reporting Standards) to company transactions.
Listed companies thus offer a double valuation - the figure provided by the stock markets and the amount registered on the accounts books....