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Evaluating Snap Following The Initial Public Offering Case Solution & Answer

Evaluating Snap Following The Initial Public Offering Case Solution

Case Summary

Elizabeth Kemp, securities executive bought 500,000 shares at the snap public offerings On Mar24, per share price raised from $17 to $22.74, which was the main reason of $ 3 million profit. However, Elizabeth doubts that she should sell and reap her profits, or she should double buy more shares on Snap.

Currently, there appear to be a number of suggestions from various commentators. Among many of them, two analysts suggested that Elizabeth is she will, buy more shares then it will be quite profitable deal for her. With seven analysts recommending her hold the shares first, while the other seven of them said she should sell them.

Based on the various opinions of these analysts and Elizabeth’s previous experience, she should decide on the best solution for the company. If you consider buying more stock options, his company will be able to earn more profit if the stock price increases in the future. To support this, it seems that many analysts are voting for a new buying option. And, in the past, Elizabeth used to be disappointed with her decision on the Go Pro IPO (the price was raised after a quiet period from $ 24 to $ 80) and she expects this to never happen again.

However, when it comes to selling stock options, this will be good for the company if the stock price goes down over time. Supporting this solution, in line with a Snap report from online analysts Paulson and Cantor, demonstrates Snap’s unconfirmed business model, an uninformed management team, growth slowdown, and competitive threats from large companies.

In this report, it will examine the financial statements of Snap by identifying the problem with other assumptions, and as a result summarize the reliability of analysts’ recommendations and cash flows from various rating methods. As a result, depending on the number, a sales recommendation is applied.

How much is Snap worth on a per share basis? Based on the following

  1. Weighted Average Cost of Capital which is 9.7%
  2. G. rate is 3.5%
  3. Free cash flow forecast (typically) and 2020 Snap revenue forecast (Special)

Capital expenditure capital (WACC) is a financial metric that shows the total amount of money (I.R paid on funds used for financial services) is a company. And in snap analysis of worth of per share it shows the WACC of 9.7%.

The final rate of Growth, at which a company is expected to grow upwards. This growth rate starts at the end of the last cash flow period predicted by a reduced cash flow model and then moves permanently.And in snap analysis of worth of per share it shows the growth rate of 3.5%.

The Discounted cash flow (DCF) Estimate of Snap Stock’s Fair Market Value on per share is 27.94. In which I divided the market capitalization of the Snap Inc.with total share of the Snap Inc. and that is the worth of Snap Inc. on per share.

Which analyst is more feasible: Brian Nowak from Morgan Stanley or Kip Cantor Fitzgerald? Why? Define the differences in their recommendations.

Analysts at firms working as authors of the first public offering Snap (IPO), including Morgan Stanley and Goldman Sachs (senior authors), have been banned from issuing Snap reports for up to 25 days after the IPO according to Securities and Exchange Commission (SEC) rules. With prices ranging from $ 21 to $ 31. Brian Nowak, analyst for – Morgan Stanley’s website, was priced at $ 28 and recommended for size………………….

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