The excel part is done just need the report to go with it. A report earning full credit will include completed tables along with the answers to the questions. The finished product should be polished and presentable. The report should be easy to read with answers to questions be easily distinguished. The analysis should provide reference to the tables. All tables should have titles and indications of sources of data. Grading: (30 points) Professional presentation of results (formatting of the report, tables and graphs) (15 points) Well-written summary section, which includes: – Statement of the problem and objectives (use questions 1 to 5) – Description of assumptions and justifications (use questions 6 to 7) – Recommendation (use question 8) (135 points) Correct calculations and clear & full discussions for each question (see below breakdown of points per question) Do not include the questions into the report. To make the answers easily distinguished start each discussion from a separate paragraph. The project should look like a report, not separate answers 1. Start with describing in few sentences what is going on in the case. 2. Describe the development of the Roku business model. What is the platform-based model? What unique advantages and risks mentioned in the case (and you see) of this business model for Roku? What are the main revenue generators mentioned? 3. Apart from business model, what were the major concerns of prospective investors in IPO? How should shareholders view the dual-class structure of Roku after the offering? 4. What are the purposes of underpricing in a typical offering? 5. Is this a good time or a bad time for an offering? Use Figures 1-3 and Exhibit 1 to search for information about deal volume, degree of market average underpricing, results of individual offerings, performance of technology index and the mentioned analysts` comments about the prospects of tech IPOs. 6. Calculate the estimates of market price per share when Roku goes public (the closing price on the first day of trading): – Conduct DCF analysis using terminal value based on assumed long-term growth rate (Note: the reasonable upper bound will be somewhere around the LT government rate, which assumes the firm will growth with the economy growth rate). Since Roku is not public, we cannot calculate the WACC for it, so you will need to calculate an appropriate discount rate based on the weighted average cost of capital (WACC) of comparable companies. Which companies should be used as comparable group? – Conduct market multiples analysis: in your discussion justify the choice of comparable companies and multiples. Why are multiples applied to sales in the last reported period and first forecasted period? (Hint: look at the EBIT or EBITDA in these periods). – Conduct DCF analysis based on market multiples applied to calculate the terminal value. Apply multiples to Sales, EBIT, EBITDA taken at the last forecasted period. 7. Perform the sensitivity analysis by exploring the effect of different growth rates and changes in operating costs of platform revenue on the share price. The sensitivity analysis helps us to assess how much the valuation depends on that particular assumption. Importantly, it reveals the implied amount of value that is assumed to be created after the planning horizon. For example, a large sensitivity implies a large amount of value could be created. Based on the sensitivity analysis, evaluate if valuations are above or below the offer price. With zero growth, are the values greater the offer price? 8. Based on current market-multiples and discounted-cash-flow (DCF) valuations, would you recommend that Portland Capital Management take a substantial position in the Roku offering assuming a $14 offering price? 9. Download from Yahoo Finance Roku daily prices starting from the first day of IPO and ending exactly one year ahead. Prepare a graph of Roku price and volume using these data. What was the closing price at the first trading day and percentage of underpricing? What was the trading price and return in one year? Did the trading price move in the direction of your calculations of the projected stock price? Using your data and extra research, conclude if Roku IPO was considered a success or fail according to analysts? 10. Finally, looking back, if Portland Capital Management took a substantial position in the offer, would it gain or lose from the investment? Make conclusions about the profitability of this investment in the short- and long- run
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