A Morgan Stanley (MS) analyst produced the financial forecasts provided in the Snap Spreadsheet Supplement shortly after the offering. The analyst assumed a WACC of 9.7% and 1,404 shares outstanding. Under these assumptions, what would be the DCF estimate of Snaps stock fair market value on a per share basis? This MS analysis became very controversial and many investors believe that it contained several errors.

Morgan Stanley
Discounted Cash Flow Analysis, Snap Inc.
	Snap DCF Analysis	2014	2015	2016	2017E	2018E	2019E	2020E	2021E	2022E	2023E	2024E	2025E	Terminal Year
	Net revenue		58.7	404.5	943.7	1934.7	3254	4901.7	6907.3	9188.5	11635.3	14130.6	16568.9	17148.8
	% change Y/Y			589.50%	133.30%	105.00%	68.20%	50.60%	40.90%	33.00%	26.60%	21.40%	17.30%	3.50%
	Adjusted EBITDA		-292.9	-459.4	-771.9	-609.5	-194.6	362.6	1474	2616.1	3887.8	5222.5	6573.6	6803.7
	(-)Cash taxes		0	0	0	0	0	0	0	0	0	823.3	1448.4
	(+/-)Changes in working capital		-15.5	-150.5	-256.6	-227.5	-230.5	-228.4	-208.9	-223.8	-248.1	-206.9	-150.6
	(-)Capex		28.3	67	82.6	96.6	109.1	120.1	130.1	140.1	148.1	155.1	161.1
	(-)Stock-based compensation		73.5	31.8	75	159.3	202.8	256.5	316.6	421.1	533.3	647.7	759.4
	Free Cash Flow (for valuation)		-410	-709	-1186	-1093	-737	-242	818	1831	2958	3390	4054	4196.1
	TV													70047.8
	FCF+TV					-1093	-737	-242	818	1831	2958	3390	4054	74243.9
	% of revenue
	EBITDA margin		-499.0%	-113.6%	-81.8%	-31.5%	-6.0%	7.4%	21.3%	28.5%	33.4%	37.0%	39.7%	39.70%
	Incremental EBITDA margin			-48.20%	-57.90%	16.40%	31.40%	33.80%	55.40%	50.10%	52.00%	53.50%	55.40%
	UFCF/EBITDA		140.10%	154.30%	153.70%	179.30%	378.70%	-66.90%	55.50%	70.00%	76.10%	64.90%	61.70%	61.70%
	DCF Valuation Assumptions			Comparable Company Assumptions
	WACC	9.7%		Market Risk Premium		5%
	Perpetual Growth Rate	3.50%		Asset Beta		0.98
	Enterprise Value	$37,599.01		Leverage		0
	less Debt			Tax Ratae		21%
	Equity Value