Assignment2_AdvCorpFinance

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School

Western University *

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Course

5100

Subject

Finance

Date

Jan 9, 2024

Type

xlsx

Pages

18

Uploaded by BarristerIceBadger32

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This spreadsheet su analyzed by Victoria
upports the analysis of the case "Spotify Direct-Listing IPO" as a Chambers, Corey Wheaton, Breena T'ien, Hartley Shapiro and Austin Krausert
Spotify Direct Listing General First year of forecast in financial model: 2018 10-year cash flow model discounted to December 31, 2017 Expense Growth Rate 10% Cost Inflation 18% Net Debt 467 Depreciation ### Revenue Growth Rates Year Growth Rate 2018 25% 2019 25% 2020 25% 2021 25% 2022 25% 2023 20% 2024 15% 2025 11% 2026 8% 2027 5% Valuation - Market Risk Premium 5% - Shares outstanding (Millions) 178.11 - Share Price 148.4 The terminal value growth rate is 1.5% to 3.0% Taxes - No taxes paid through 2022 - Tax rate after 2022 25%
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g - IPO
Valuation - Market Risk Premium 5.0% - Beta without tax 13.86 - Beta with tax 14.13 - Shares outstanding (Millions) 178.11 - Risk-free 2.85% - Cost of Equity without tax 0.72 - Cost of Equity with tax 0.73 TAKE 2 Without Tax Company 5 yr Beta LTM EBITDA otal Enterprise Valu Alibaba 2.58 14,222.70 456,971.0 Amazon 1.55 15,039 706,121.7 Apple 1.18 74,174 889,968.7 Baidu 1.77 4,362 68,388.2 Comcast 1.16 27,812 217,888.2 EBay 1.06 2,941 44,746.5 Facebook 0.66 23,228 402,841.3 Netflix 0.96 910.6 127,686.1 Pandora -0.4 -289 1,527.2 Walt Disney 1.31 16,912 174,522.2 Time Warner 0.92 9,081 94,621.0 Twenty-First Century F 1.26 6540 82,104.3 Twitter 0.8 344.8 18,675.1 Wayfair 1.27 -174.2 5,560.6 1.15 195,103.70 Spotify Unlevered B 1.06 Levered B 13.86 TAKE 2 With Tax Company 5 yr Beta LTM EBITDA otal Enterprise Valu Alibaba 2.58 14,222.70 456,971.0 Amazon 1.55 15,039 706,121.7 Apple 1.18 74,174 889,968.7 Baidu 1.77 4,362 68,388.2 Comcast 1.16 27,812 217,888.2 EBay 1.06 2,941 44,746.5 Facebook 0.66 23,228 402,841.3 Netflix 0.96 910.6 127,686.1 Pandora -0.4 -289 1,527.2 Walt Disney 1.31 16,912 174,522.2
Time Warner 0.92 9,081 94,621.0 Twenty-First Century F 1.26 6540 82,104.3 Twitter 0.8 344.8 18,675.1 Wayfair 1.27 -174.2 5,560.6 1.15 195,103.70 Spotify Unlevered B 1.08 Levered B 14.13
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hares Outstandin Close Price MV of Equity MV of Debt Market Cap 2569.5 178.91 459,709.25 -2,738.245 459,705.20 484.1 1431.42 692,950.42 13,171.278 692,960.70 5074 166.48 844,719.52 45,249.180 844,721.70 348.2 223.1 77,683.42 -9,295.220 77,675.00 4644.5 33.28 154,568.96 63,319.240 154,569.20 1012.1 40.11 40,595.33 4,151.169 40,594.50 2905 153.03 444,552.15 -41,710.850 444,552.30 433.9 285.77 123,995.60 3,690.497 124,009.50 254.9 4.96 1,264.30 262.896 1,264.20 1503.7 98.54 148,174.60 26,347.602 148,172.20 779.9 94.2 73,466.58 21,154.420 73,462.00 1852.5 35.88 66,467.70 15,636.600 66,165.30 748.1 28.45 21,283.45 -2,608.345 21,284.50 88.5 65.14 5,764.89 -204.290 5,765.10 2,869.0 238 hares Outstandin Close Price MV of Equity MV of Debt Market Cap 2569.5 178.91 459,709.25 -2,738.245 459,705.20 484.1 1431.42 692,950.42 13,171.278 692,960.70 5074 166.48 844,719.52 45,249.180 844,721.70 348.2 223.1 77,683.42 -9,295.220 77,675.00 4644.5 33.28 154,568.96 63,319.240 154,569.20 1012.1 40.11 40,595.33 4,151.169 40,594.50 2905 153.03 444,552.15 -41,710.850 444,552.30 433.9 285.77 123,995.60 3,690.497 124,009.50 254.9 4.96 1,264.30 262.896 1,264.20 1503.7 98.54 148,174.60 26,347.602 148,172.20
779.9 94.2 73,466.58 21,154.420 73,462.00 1852.5 35.88 66,467.70 15,636.600 66,165.30 748.1 28.45 21,283.45 -2,608.345 21,284.50 88.5 65.14 5,764.89 -204.290 5,765.10 2,869.0 238
D/E -0.0060 0.0190 0.0536 -0.1197 0.4096 0.1023 -0.0938 0.0298 0.2080 0.1778 0.2880 0.2363 -0.1225 -0.0354 0.0819 12.05462185 D/E -0.0060 0.0190 0.0536 -0.1197 0.4096 0.1023 -0.0938 0.0298 0.2080 0.1778
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0.2880 0.2363 -0.1225 -0.0354 0.0819 12.05462185
SCENARIO SWITCH: 1 2018 2019 2020 Economic Scenarios FX Rate - US$ / € 1.18 1.099 1.132 Base Case 1.18 1.099 1.132 Best Case 1.17 1.046 1.077 Worst Case 1.19 1.146 1.212 Revenue Growth 25% 25% 25% Base Case 25% 25% 25% Best Case 25% 25% 26% Worst Case 23% 23% 24%
2021 2022 2023 2024 2025 2026 2027 Term 1.165 1.159 1.152 1.159 1.157 1.156 1.157 1.156 1.165 1.159 1.152 1.159 1.157 1.156 1.157 1.156 1.126 1.133 1.112 1.124 1.123 1.120 1.122 1.121 1.219 1.202 ### ### ### ### ### ### 25% 25% 20% 15% 11% 8% 5% 5% 25% 25% 20% 15% 11% 8% 5% 5% 26% 27% 27% 17% 11% 10% 6% 5% 25% 25% 18% 14% 11% 8% 4% 3%
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Interest 974.00 Debt 2,869.00 Cost of debt 33.95% MV of Equity 26,431.52 MV of Debt 2,869.00 Weight of Equity 0.9021 Weight of Debt 0.0979 Cost of Equity w/o tax 0.72 Cost of Equity w/ tax 0.73 Cost of Debt 0.3395 Tax 0.25 WACC (w/o Tax) 0.68 WACC (w/ Tax) 0.69
*All data in Euro Millions 2015 2016 2017 2018 Revenue ### ### ### ### Cost of Revenue ### ### ### ### Expenses € 461.00 € 750.00 ### ### % Change in Expenses 63% 64% 10% % Change in Revenue 52% 39% 25% % Change in Cost 49% 27% 18% EBITDA ### ### ### € (61.58) 2015 2016 2017 2018 EBITDA ### ### ### € (61.58) Current Taxes € 5.00 € 4.00 € 2.00 € - € 230.00 € 353.00 € 447.00 € 255.63 Depreciation (Add back) € 26.00 € 32.00 € 46.00 € 34.67 Unlevered Free Cash Flow ### ### ### ### Unlevered FCF (USD) -$ 333.40 Capital Expenditures Less Depreciation Plus Increase in Working Capital
Spotify Direct-Listing IPO 2019 2020 2021 2022 2023 2024 2025 ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### 10% 10% 10% 10% 10% 10% 10% 25% 25% 25% 25% 20% 15% 11% 18% 18% 18% 18% 18% 18% 18% € 393.19 ### ### ### ### ### ### 2019 2020 2021 2022 2023 2024 2025 € 393.19 ### ### ### ### ### ### € - € - € - € - ### ### ### € 319.53 € 399.41 € 499.27 € 624.08 € 624.08 € 561.68 € 473.68 € 34.67 € 34.67 € 34.67 € 34.67 € 34.67 € 34.67 € 34.67 € 108.32 € 665.33 ### ### ### ### ### $ 119.05 $ 753.16 ### $2,899.31 $2,824.57 $3,308.15 $3,228.05
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2026 2027 TV ### ### ### ### ### ### ### ### ### 10% 10% 10% 8% 5% 5% 18% 18% 18% ### ### € (751.42) 2026 2027 TV ### ### € (751.42) € 845.13 € 384.02 € - € 382.39 € 258.11 € 371.39 € 34.67 € 34.67 € 34.67 ### € 928.61 ### $2,528.36 $1,074.39 -$1,258.36
Spotify DCF Valuation Schedule Terminal Va (US$ Millions) 1.5% 2.0% WACC (Without Tax) 0.68 PV of 10 yr Cash Flow $4,320.70 ### WACC (With Tax) 0.69 PV of Terminal Year -$ 12.95 -$ 13.05 Enterprise Value ### ### Less Net Debt $ 467.00 $ 467.00 Equity Value (MM) $3,840.74 ### Shares O/S (MM) 178.11 178.11 Equity Value per Sha $ 21.56 $ 21.56
alue Growth Rate 2.5% 3.0% ### $ 4,320.70 -$ 13.15 -$ 13.25 ### ### $ 467.00 $ 467.00 ### $ 3,840.45 178.11 178.11 $ 21.56 $ 21.56
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