This question requires you, among other things, to calculate the stock price for Groupon Inc, and provide the needed analysis as asked in what follows. You will need to use "Sources of Financial Data" listed in Course Content to obtain the necessary financial info/statements for Groupon Inc., identify its peer companies and obtain pricing and financial information for them.
A. Develop a DCF model using Excel to estimate the fair value of the firm's common shares at the end of 2011 - for historical numbers use the data from SEC filings including S-1 form with all amendments and Prospectus, and other sources of financial data. Don't forget to include the terminal value (value after the forecast period) in your estimate.
B. For each of the value drivers (i.e., revenues growth and profit margin over the forecast period, tax rate, WACC etc.), identify your sources and assumptions, and show all you calculations. This is especially important for the WACC that you will use to calculate the NPV, due to the sensitivity of your results to this critical parameter.
C. Perform a sensitivity analysis for WACC, growth rate and profit margin.
D. Using comparable ratios of peer companies, estimate the company's stock price at the end of 2011. List the major assumptions and sources of information that you used in your calculations. Were your assumptions reasonable enough? Explain.
E. Groupon Inc. went public on November 4, 2011. How do your DCF and relative valuations compare with the company's IPO price? Its first-day closing? Average price for trading period in 2011? If your valuations differ from observed prices, can you briefly forward any possible explanations?
F. A year earlier, in November 2010, it was rumored that Google might acquire Groupon at $6 billion, but the acquisition never realized. What is your estimate of a fair value of Groupon to Google at that time? Please don't forget a possible synergy.
G. In November 2009, Accel Growth Fund invested $20 million in the company by buying 2,932,553 shares of Series E convertible preferred stock. What was the realized IRR of this investment, if "Each share of Series E preferred stock was converted into 12 shares of Class A common stock on October 31, 2011" (Amendment No. 8 to form S-1, filed with SEC on November 2, 2011, page II-3)?
Make sure to justify your responses by using the available data/info and carrying out any needed and relevant calculations.
Here is the part of this list:
• Yahoo Finance;
• Google Finance;
• Reuters;
• Edgar (SEC source of 10-K, S-1 form, Prospectus and other required financial reports);
• Hoovers (general company information);
• Bloomberg (a good source of interest rate data);
• Wall Street Journal (free site of the famous newspaper);
• NYSE Euronext (New York Stock Exchange website);