The calculations below outline how an intrinsic value for Snap is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.
See our documentation to learn about this calculation.
|Levered FCF (USD, Millions)||$-758.09||$-563.86||$-181.70||$585.90||$1,344.70|
|Source||Analyst x16||Analyst x18||Analyst x9||Analyst x10||Analyst x5|
Discounted (@ 8.9%)
Present value of next 5 years cash flows:
Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)
Terminal Value = $1,345 × (1 + 2.5%) ÷ (8.93% – 2.5%)
Terminal value based on the Perpetuity Method where growth (g) = 2.5%:
Present value of terminal value:
Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
Value = Total value / Shares Outstanding ($13,896 / 1,157)
Value per share:
Current discount (share price of $21.2): -77%
The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.
Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
Discount rate = 8.93% = 2.47% + (0.858 * 7.53%)
The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm).
Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
0.858 = 0.857 (1 + (1- 30%) (0.06%))
Levered Beta used in calculation = 0.858
Are Snap's annual earnings growth expected to exceed 3.6% over the next 3 years?
Mr. Evan Spiegel is a Co-Founder of Snap Inc. and serves as its President. Mr. Spiegel has been Chief Executive Officer and Director of Snap Inc. since May 2012.
Average tenure of the Snap board of directors:
Snap Inc. operates as a camera company. It offers Snapchat, a camera application that helps people to communicate through short videos and images. The company also provides a suite of content tools for partners to build, edit, and publish snaps and attachments based on editorial content; and Spectacles, which are sunglasses that capture video from a human perspective. The company was formerly known as Snapchat, Inc. and changed its name to Snap Inc. in September 2016. Snap Inc. was founded in 2010 and is headquartered in Venice, California.
|Market Cap:||$24,533 million|
63 Market Street, Venice, 90291, United States
|Sector:||Software and Services|