Editing Stockhub
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[[File:Stockhub logo icon meta tag.png|thumb]] | |||
Helping to make more money for everyone (and not just the wealthy!). | |||
{| class="wikitable" | {| class="wikitable" | ||
|+ Key information | |+ Key information | ||
|- | |- | ||
| Risk/return|| | | Risk/return|| High | ||
|- | |- | ||
| Price per share|| | | Price per share|| £10 | ||
|- | |- | ||
| Asset class|| | | Asset class|| Equities<ref name=":0">https://find-and-update.company-information.service.gov.uk/company/13169692</ref> | ||
|- | |- | ||
| Industry|| | | Industry|| Fintech | ||
|- | |- | ||
| Country of incorporation|| | | Country of incorporation|| United Kingdom<ref name=":0" /> | ||
|- | |- | ||
| Minimum investment amount|| | | Minimum investment amount|| £10 | ||
|- | |- | ||
| Maximum investment amount|| | | Maximum investment amount|| £500,000 | ||
|- | |- | ||
| Current valuation|| | | Current valuation|| £4,000,000 | ||
|- | |- | ||
| Investor type|| | | Investor type|| All | ||
|- | |- | ||
| Tax schemes|| | | Tax schemes|| SEIS/EIS | ||
|- | |- | ||
| Bid/ask spread|| | | Bid/ask spread|| NA | ||
|- | |- | ||
| Commission amount|| | | Commission amount|| Zero | ||
|- | |- | ||
| Market|| | | Market|| Private<ref name=":0" /> | ||
|} | |} | ||
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| Cost of goods sold margin (%) | | Cost of goods sold margin (%) | ||
|20% | |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)<ref name=":7">http://people.stern.nyu.edu/adamodar/pdfiles/papers/younggrowth.pdf</ref>, and the margin for its peers | |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)<ref name=":7">http://people.stern.nyu.edu/adamodar/pdfiles/papers/younggrowth.pdf</ref>, and the margin for its peers was 20%. | ||
|- | |- | ||
|Selling, General and Administrative expenses margin (%) | |Selling, General and Administrative expenses margin (%) | ||
|80% | |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)<ref name=":7" />, and the margin for its peers | |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)<ref name=":7" />, and the margin for its peers was 80%. | ||
|- | |- | ||
|Tax rate (%) | |Tax rate (%) | ||
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|Depreciation rate (%) | |Depreciation rate (%) | ||
|10% | |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)<ref name=":7" />, and the margin for its peers | |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)<ref name=":7" />, and the margin for its peers was 10%. | ||
|- | |- | ||
|Fixed capital margin (%) | |Fixed capital margin (%) | ||
|25% | |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)<ref name=":7" />, and the margin for its peers | |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)<ref name=":7" />, and the margin for its peers was 25%. | ||
|- | |- | ||
|Change in working capital (£000) | |Change in working capital (£000) | ||
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| Cost of goods sold margin (%) | | Cost of goods sold margin (%) | ||
|20% | |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)<ref name=":7" />, and the margin for its peers | |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)<ref name=":7" />, and the margin for its peers was 20%. | ||
|- | |- | ||
|Selling, General and Administrative expenses margin (%) | |Selling, General and Administrative expenses margin (%) | ||
|60% | |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)<ref name=":7" />, and the margin for its peers | |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)<ref name=":7" />, and the margin for its peers was 60%. | ||
|- | |- | ||
|Tax rate (%) | |Tax rate (%) | ||
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|Depreciation rate (%) | |Depreciation rate (%) | ||
|10% | |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)<ref name=":7" />, and the margin for its peers | |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)<ref name=":7" />, and the margin for its peers was 10%. | ||
|- | |- | ||
|Fixed capital margin (%) | |Fixed capital margin (%) | ||
|25% | |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)<ref name=":7" />, and the margin for its peers | |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)<ref name=":7" />, and the margin for its peers was 25%. | ||
|- | |- | ||
|Change in working capital (£000) | |Change in working capital (£000) | ||
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| Cost of goods sold margin (%) | | Cost of goods sold margin (%) | ||
|20% | |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)<ref name=":7" />, and the margin for its peers | |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)<ref name=":7" />, and the margin for its peers was 20%. | ||
|- | |- | ||
|Selling, General and Administrative expenses margin (%) | |Selling, General and Administrative expenses margin (%) | ||
|40% | |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)<ref name=":7" />, and the margin for its peers | |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)<ref name=":7" />, and the margin for its peers was 40%. | ||
|- | |- | ||
|Tax rate (%) | |Tax rate (%) | ||
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|Depreciation rate (%) | |Depreciation rate (%) | ||
|10% | |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)<ref name=":7" />, and the margin for its peers | |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)<ref name=":7" />, and the margin for its peers was 10%. | ||
|- | |- | ||
|Fixed capital margin (%) | |Fixed capital margin (%) | ||
|25% | |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)<ref name=":7" />, and the margin for its peers | |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)<ref name=":7" />, and the margin for its peers was 25%. | ||
|- | |- | ||
|Change in working capital (£000) | |Change in working capital (£000) | ||
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|Cost of goods sold margin (%) | |Cost of goods sold margin (%) | ||
|20% | |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)<ref name=":7" />, and the margin for its peers | |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)<ref name=":7" />, and the margin for its peers was 20%. | ||
|- | |- | ||
|Selling, General and Administrative expenses margin (%) | |Selling, General and Administrative expenses margin (%) | ||
|40% | |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)<ref name=":7" />, and the margin for its peers | |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)<ref name=":7" />, and the margin for its peers was 40%. | ||
|- | |- | ||
|Tax rate (%) | |Tax rate (%) | ||
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|Depreciation rate (%) | |Depreciation rate (%) | ||
|10% | |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)<ref name=":7" />, and the margin for its peers | |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)<ref name=":7" />, and the margin for its peers was 10%. | ||
|- | |- | ||
|Fixed capital margin (%) | |Fixed capital margin (%) | ||
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#By comparing the investment to other similar investments (i.e. relative valuation). | #By comparing the investment to other similar investments (i.e. relative valuation). | ||
Research suggests that in terms of estimating the expected return of an investment | Research suggests that the approach that is more accurate (in terms of estimating the expected return of an investment) is the discounted cash flow approach<ref name=":5">Demirakos et al., 2010; Gleason et al., 2013</ref>, so that's the approach that Stockhub suggests to use here; nevertheless, for completeness purposes, separately, the valuation of the company is also estimated using the using the relative valuation approach (the valuation based on the relative approach can be found in the appendix of this report). | ||
|- | |- | ||
|Which financial forecasts to use? | |Which financial forecasts to use? | ||
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|10% | |10% | ||
|There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital. | |There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital. | ||
|- | |- | ||
|Probability of success (%) | |Probability of success (%) | ||
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|Which time period do you want to use to estimate the expected return? | |Which time period do you want to use to estimate the expected return? | ||
|Between now and five years time | |Between now and five years time | ||
| | |Stockhub suggests that to account for general market cyclicity, it's best to estimate the expected return of the company between now and five years time. | ||
|} | |} | ||
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Note: five years after incorporation (i.e. April 2018), Robinhood’s valuation was $5.6 billion, and it was trading on a growth-adjusted EV/sales ratio of 43x. | Note: five years after incorporation (i.e. April 2018), Robinhood’s valuation was $5.6 billion, and it was trading on a growth-adjusted EV/sales ratio of 43x. | ||
===Economic links to cash flow patterns === | ===Economic links to cash flow patterns === | ||
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[[Category:Equities]] | [[Category:Equities]] | ||
[[Category:United Kingdom]] | [[Category:United Kingdom]] | ||