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====Who’s the target audience of the company’s flagship product?==== | ====Who’s the target audience of the company’s flagship product?==== | ||
The audience is people who are actively involved in the | The audience is people who are actively involved in the process of deciding which investments to make. | ||
====What's the flagship product?==== | ====What's the flagship product?==== | ||
Revision as of 08:53, 16 May 2022
Summary
Operations
What's the mission of the company?
What's the company's main offering(s)?
Who’s the target audience of the company’s flagship product?
The audience is people who are actively involved in the process of deciding which investments to make.
What's the flagship product?
The product is an real estate investment platform.
What makes the flagship product unique?
The uniqueness of the platform is that the information about the buying and selling of the investments on the platform are recorded on a blockchain. Research suggests that recording the information on a blockchain will result in Active Investors making real estate investments faster and/or at a lower cost, and, ultimately, more money.
What's the biggest achievement of the company?
What's the next key milestone of the company?
Market
What's the total addressable market of the company?
What's the serviceable available market of the company?
What's the serviceable obtainable market of the company?
Competition
Team
Financials
What are the financial forecasts?
In keeping in-line with industry standards, the number of years of financial forecasts shown below is five years.
Income statement
| Year/Item | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Year end date | 28/02/2022 | 28/02/2023 | 28/02/2024 | 28/02/2025 | 28/02/2026 |
| Revenues (£'000) | £126.169 | £332.681 | £842.810 | £2,051.447 | £4,797.544 |
| Gross profits (£'000) | £100.935 | £266.145 | £674.248 | £1,641.158 | £3,838.035 |
| Operating profits (£'000) | £25.234 | £66.536 | £168.562 | £410.289 | £959.509 |
| Net profits (£'000) | £20.439 | £53.894 | £136.535 | £332.334 | £777.202 |
What are the assumptions used to estimate the financial forecasts?
| Description | Value | Commentary |
|---|---|---|
Revenue
| ||
| What's the estimated current size of the total addressable market? | £635,325,000,000 | Here, the total addressable market (TAM) is defined as the global advertising market, and based on a number of assumptions[Note 2], it is estimated that the size of the market as of today (14th March 2022), in terms of revenue, is £635 billion (or $850 billion). |
| What's the estimated terminal annual growth rate of the total addressable market? | 3% | Research shows that the growth rate of the global advertising market (i.e. the total addressable market) is similar to the growth rate of global gross domestic product[2], which has averaged (medium) around 3% per year in the last 20 years (2001 to 2022)[3]. |
| What's the estimated Stockhub peak market share? | 2% | Research shows that there's an almost perfect positive correlation between the amount of adverting revenue generated on a platform and the total amount of time spent by users on the platform. In other words, the more time users spend on a platform, the more advertising revenue the platform generates. Accordingly, Stockhub believes that the best measurement unit of future advertising market share is time. In UK broadcasting, there's a limit on the amount of advertising that can be shown to viewers, and the limit is 15% of 24 hours (i.e. around 9 minutes per hour or around 216 minutes a day). Research suggests that Active Investors represent around 10.4% of the global population and that the average amount of time Active Investors spend researching investments is 30 minutes per day. Consequently, the Stockhub company estimates that the peak market share of its namesake platform is around 2%, and, therefore, suggests using the share amount here. |
| Which distribution function do you want to use to estimate Stockhub revenue? | Gaussian | Research suggests that the revenue pattern of companies is similar to the pattern produced by the Gaussian distribution function (i.e. the revenue distribution is bell shaped)[4], so Stockhub suggests using that function here. |
| What is the estimated Stockhub lifespan? | 50 years | Stockhub's vision is to be a large organisation (more than 10,000 employees), and research shows that the average lifespan of a large corporation is around 50 years.[5] |
| What's the estimated standard deviation of Stockhub revenue? | 5 years | Another way of asking this question is this way: within how many years either side of the mean does 68% of revenue occur? The Stockhub company suggests using 5 years (i.e. 68% of all sales happen within 5 years either side of the mean year), so that's what's used here. |
Growth stages
| ||
| How many main stages of growth is Stockhub expected to go through? | 4 stages | Research suggests that a company typically goes through four distinct stages of cash flow growth.[6] Research also shows that incorporating those stages into the discounted cash flow model improves the quality of the model and, ultimately, the quality of the value estimation.[7]
In addition, research shows that a key way to determine the stage which a company is in is by examining the cash flow patterns of the company.[8] A summary of the economic links to cash flow patterns can be found in the appendix of this report. Stockhub estimates that with its operating and investing cash flows both negative (-) and its financing cash flows positive (+), the company is in the first stage of growth (i.e. the introduction stage), and, therefore, it has a total of four main stages of growth. |
| What's the expected duration of growth stage 1? | 17 years | Research suggests that given the expected lifespan of the company (i.e. 50 years), 17 years is suitable for stage 1.[9] |
| What's the expected duration of growth stage 2? | 4 years | Research suggests that given the expected lifespan of the company (i.e. 50 years), 4 years is suitable for stage 2.[9] |
| What's the expected duration of growth stage 3? | 8 years | Research suggests that given the expected lifespan of the company (i.e. 50 years), 8 years is suitable for stage 3.[9] |
| What's the expected duration of growth stage 4? | 21 years | Research suggests that given the expected lifespan of the company (i.e. 50 years), 21 years is suitable for stage 4.[9] |
Growth stage 1
| ||
| Cost of goods sold margin (%) | 20% | Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 1)[10], and the margin for its peers was 20%. |
| Selling, General and Administrative expenses margin (%) | 80% | Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 1)[10], and the margin for its peers was 80%. |
| Tax rate (%) | 19% | Research suggests that it's best to use the marginal tax rate of the country in which the company mainly operates. The Stockhub company mainly operates in the United Kingdom, and the marginal tax rate there is 19%. |
| Depreciation rate (%) | 10% | Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 1)[10], and the margin for its peers was 10%. |
| Fixed capital margin (%) | 25% | Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 1)[10], and the margin for its peers was 25%. |
| Change in working capital (£000) | Zero | Stockhub suggests that for simplicity, the change in working capital figure is zero. |
Growth stage 2
| ||
| Cost of goods sold margin (%) | 20% | Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2)[10], and the margin for its peers was 20%. |
| Selling, General and Administrative expenses margin (%) | 60% | Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2)[10], and the margin for its peers was 60%. |
| Tax rate (%) | 19% | Research suggests that it's best to use the marginal tax rate of the country in which the company mainly operates. The Stockhub company mainly operates in the United Kingdom, and the marginal tax rate there is 19%. |
| Depreciation rate (%) | 10% | Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2)[10], and the margin for its peers was 10%. |
| Fixed capital margin (%) | 25% | Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2)[10], and the margin for its peers was 25%. |
| Change in working capital (£000) | Zero | Stockhub suggests that for simplicity, the change in working capital figure is zero. |
Growth stage 3
| ||
| Cost of goods sold margin (%) | 20% | Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 3)[10], and the margin for its peers was 20%. |
| Selling, General and Administrative expenses margin (%) | 40% | Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 3)[10], and the margin for its peers was 40%. |
| Tax rate (%) | 19% | Research suggests that it's best to use the marginal tax rate of the country in which the company mainly operates. The Stockhub company mainly operates in the United Kingdom, and the marginal tax rate there is 19%. |
| Depreciation rate (%) | 10% | Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 3)[10], and the margin for its peers was 10%. |
| Fixed capital margin (%) | 25% | Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 3)[10], and the margin for its peers was 25%. |
| Change in working capital (£000) | Zero | Stockhub suggests that for simplicity, the change in working capital figure is zero. |
Growth stage 4
| ||
| Cost of goods sold margin (%) | 20% | Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 4)[10], and the margin for its peers was 20%. |
| Selling, General and Administrative expenses margin (%) | 40% | Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 4)[10], and the margin for its peers was 40%. |
| Tax rate (%) | 19% | Research suggests that it's best to use the marginal tax rate of the country in which the company mainly operates. The Stockhub company mainly operates in the United Kingdom, and the marginal tax rate there is 19%. |
| Depreciation rate (%) | 10% | Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 4)[10], and the margin for its peers was 10%. |
| Fixed capital margin (%) | 25% | Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 4)[10], and the margin for its peers was 25%. |
| Change in working capital (£000) | Zero | Stockhub suggests that for simplicity, the change in working capital figure is zero. |
Risks
Early-stage investment
Illiquid investment
Valuation
What's the expected return of an investment in the company?
What are the assumptions used to estimate the return?
Sensitive analysis
Actions
- ↑ Source: Stockhub Limited
- ↑ http://www.robertpicard.net/files/econgrowthandadvertising.pdf
- ↑ https://www.macrotrends.net/countries/WLD/world/gdp-growth-rate
- ↑ http://escml.umd.edu/Papers/ObsCPMT.pdf
- ↑ Stadler, Enduring Success, 3–5.
- ↑ Levie J, Lichtenstein BB (2010) A terminal assessment of stages theory: Introducing a dynamic approach to entrepreneurship. Entrepreneurship: Theory & Practice 34(2): 317–350. https://doi.org/10.1111/j.1540-6520.2010.00377.x
- ↑ Stef Hinfelaar et al.:, 2019.
- ↑ Dickinson, 2010.
- ↑ 9.0 9.1 9.2 9.3 http://escml.umd.edu/Papers/ObsCPMT.pdf
- ↑ 10.00 10.01 10.02 10.03 10.04 10.05 10.06 10.07 10.08 10.09 10.10 10.11 10.12 10.13 10.14 10.15 http://people.stern.nyu.edu/adamodar/pdfiles/papers/younggrowth.pdf
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