Determine an unbiased valuation for the SNAP IPO.

a. Use your MS Excel sheet from item #1 to recalculate the share price using parameters that are not as optimistic. For example, a higher WACC, more shares, lower terminal value, etc...

b. Use your calculation and course concepts to recommend an appropriate IPO price per share.

In October 2016, rumors about a potential Snap IPO began to surface. Analysts indicated that the company looked to raise approximately $3 billion, and provided wide estimates for its potential valuation, ranging from $25 billion to $35 billion, with some predicting as much as $40 billion.54 In February 2017, Snap announced its intention to pursue an IPO, filing the requisite documents with the SEC. With Goldman Sachs and Morgan Stanley as its lead underwriters, Snap looked to sell 145 million Class A shares at a target price of $14 to $16 per share. Existing shareholders planned to offer an additional 55 million Class A shares. After the offering, Snap would have a total of 1.157 billion shares outstanding.d Snapchat also gave the underwriters the right to offer up to an additional 30 millione shares in a greenshoe provisiona clause that allowed underwriters to buy up to an additional 15% of a companys shares at the offering price if demand exceeded expectations.55 The company expected to receive approximately $2.1 billion56 in net proceeds from the offering after subtraction of commissions and expenses. The offering aimed to give Snap greater liquidity and a public market for its Class A stock. According to Snaps S-1 filing, the net proceeds would be mainly used for general corporate purposes, such as working capital, operating expenses, and capital expenditures. We may also use a portion of the net proceeds to acquire complimentary businesses, products, services, or technologies.