- You are a financial analyst for SNAP, Inc. SNAP’s flagship product, Snapchat, is a camera application which helps people communicate visually through short videos and images called Snaps. The CEO and CFO of SNAP are Messrs. Evan Spiegel and Drew Vollero, respectively. Recent events have caused the officers to be concerned. Its Spectacles product failed. The company had almost $40 million in write-offs for Spectacles inventory. The most recent update for Snapchat has been poorly received. Finally, celebrity Kylie Jenner declared in a tweet she was done with Snapchat causing stock price declines costing the company $1.3 billion in market capitalization.
The officers have a legitimate concern for the company’s future. One of their concerns is whether the company has enough cash until it becomes profitable. You are a seasoned financial analyst with experience in SNAP’s operations, products, industry, competitors, and markets. They have asked you to conduct a thorough financial analysis and present your assessment of the company’s financial position and future cash flow needs.
You will present the results of your analysis in a report not-to-exceed 3 pages. Appendices must show results relevant to support your insights and strategic implications. Your report (at a minimum) will include the following:
- Select the financial analysis tools you believe most relevant to conduct your analysis? Explain why the tools are the most relevant. Do not just state the definition of the tools you select. You must explain why the tools are the most relevant to analyzing SNAP’s financial performance and condition.
- Prepare a list of major assumptions including the rationale. The list should be included in the Appendices.
- State major insights from your analysis. Describe the strategic implications from your insights. Be specific and thorough. Your answer must show your knowledge of SNAP’s business operations. Specifically address analysis of cash flow and capital structure.
- Close the report with 2-3 major recommendations. Support your recommendations from your analysis and research.
- The level of research will be considered in grading all aspects of the report.
