Image: Google
Market Valuation: $1.2 Trillion
Ironbound Buy-Side Valuation: $700 Billion Ironbound Assessment: California based Alphabet Inc., parent company of Google founded in 1998, is an American multinational technology company. In 2021 the company reported $257 Billion in sales and $76 Billion in profits. Our upside valuation is $2 Trillion based on the average of $200 Billion in sales over the past three years and growth continuing to exceed 10% annually. This is a reasonable expectation considering Google is at the heart of the digital economy, which continues to grow as the world rapidly shifts further online. Much of this accelerated growth can be attributed to aligning stakeholders’ together. In 2007, Google was the first major company to be carbon neutral in their operations, by 2020 they were the first major company to be carbon neutral for its entire history. Their 2030 goal is to be the first major company that runs on carbon free energy in perpetuity, and help other organizations follow in their footsteps. The biggest hurdle holding back the stock price is the 51.4% voting control by the two co-founders. The limited control prevents a sovereign wealth fund or group from acquiring the company. The current market valuation is trading at 21-times the average operating income, much higher than 14-times multiple favorable for a value driven buyer.
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Image: Snapchat
Market Valuation: $16 Billion
Ironbound Buy-Side Valuation: $40 Billion Ironbound Assessment: California based Snap Inc., founded in 2011, is an American camera and social media company. Our upside valuation potential is $40 Billion based on double digit sales growth. In 2021, Snap reported having over 300 million Daily-Active-Users (DAU) and generated over $4 Billion in advertising sales. With sales increasing and operating expenses on the decline, the company should cross $10 Billion in revenue and turn profitable within the next few years. We like Snap because it is uniquely positioned around the next biggest consumer demographics of Millennials and Gen Z. In addition, the 2021 Annual 10-K filing discloses numerous holistic value laden initiatives such as: employee value by paying a minimum living wage for all employees globally, customer value with a Privacy Policy statement that can easily be understood in “plain language”, and society value by becoming historically carbon neutral from founding in 2011 through to 2020. All of which we like. Unfortunately, the cofounders’ 99% control over voting shares, severely limits a possible takeover – holding the stock price down. On the other hand, the limited control prevents a sovereign wealth fund or group from acquiring the company for $40 Billion, or 10-times 2021 sales. At this price, the buyer(s) would acquire $7 Billion in assets and pay about 7¢ per DAU per day for 5 years, a discount to the 10¢ Twitter comparable acquisition, in Goodwill.
Image: Seagen
Market Valuation: $25 Billion
Ironbound Buy-Side Valuation: $23 Billion Ironbound Assessment: Seattle based Seagen Inc, founded in 1997, is a leading American biotechnology company that develops and commercializes targeted cancer therapies. Our buyout valuation fairly prices the company between $15 to $32 Billion, or approximately 10-to 20-times sales. The lofty valuation is 90% Goodwill for the rights to develop and produce TUKYSA® - a lifesaving treatment for metastatic HER-2 positive breast cancers. TUKYSA® promises a phenomenal growth opportunity; upon FDA approval in 2020 initial sales started at $120 million and skyrocketed the following year to $334 million. Merck shareholders are extremely optimistic outbidding by 25 percent our highest estimated valuation range. The $40 Billion acquisition would strategically entrench Merck further into the oncology space alongside their blockbuster Keytruda®. Indeed, Merck has greater scale capabilities to commercialize the acquisition and achieve a profitable return on investment faster than Seagen could on their own.
Image: Meta
Market Valuation: $250 Billion
Ironbound Buy-Side Valuation: $440 Billion Ironbound Assessment: California based Meta Inc., formerly named Facebook founded in 2004, is a multinational Social Media conglomerate focused on technologies that help people connect, find communities, and grow businesses. Meta wants all their products to share a vision of bringing the metaverse to life. Our upside valuation is $1 Trillion based on $100 Billion in sales for 2021 and continued sales growth exceeding 10% over the next few years. This is a reasonable expectation considering the company reported in 2021, Daily-active-users (DAU) just shy of 2 billion, nearly a third of the world’s population. The company has a strong societal mission, giving people the power to build communities and bring the world closer together, which will help the company continue to attract and retain top talent. Severely depressing the potential upside is the founder’s voting control, currently used to direct over $10 Billion a year to finance the buildout of a highly uncertain Metaverse. On the other hand, the limited control is helping prevent a sovereign wealth fund or group from acquiring the company for $440 Billion, or 13-times the average operating income between 2021 and 2019. At this price, the buyer(s) would acquire $100 Billion in assets and pay about 10¢ per DAU per day for 5 years, comparable to the Twitter acquisition, in Goodwill.
Market Valuation: $700 Million
Ironbound Buy-Side Valuation: $99 Million Ironbound Assessment: New Jersey Based Bed Bath & Beyond, founded in 1971, is an American retailer that sells an assortment of merchandise in the Home, Baby, Beauty & Wellness markets. Our buyout valuation is $1.5 Billion that would account for the cash balance, property, and some additional goodwill. Unfortunately, the company faces major headwinds to profitability despite generating nearly $10 Billion in sales from numerous high quality retail locations and digital on-demand transformation strategies. Several problems at the Company can be rooted in a culture steeped in financial mismanagement. At the end of 2021, the company reported having only $440 million in cash on the balance sheet, of which most could be wiped-out to cover $320 million in current merchandise credits and gift card liabilities. The company faces shareholder lawsuits for false or misleading financial statements and also lawsuits for unjust enrichment using corporate assets to repurchase shares. Certain executive officers were awarded stock options with strike prices of $6, while employees were offered strikes ranging from $17 to $32. With a book value of only $175 million, our position is to stay away from this company until the stock drops below $1 per share to profit from a short squeeze.
Image: Business Insider
Market Valuation: $30 Billion
Ironbound Buy-Side Valuation: $20 Billion Ironbound Assessment: San Francisco based Twitter, founded in 2006, is a global social networking platform for real-time public self-expression. Our upside valuation is between $50 and $75 Billion, based on the $5 Billion in sales for 2021 and projected $7.5 Billion target for 2022. Twitter has numerous lucrative opportunities given their globally entrenched politically influential capabilities. However, headwinds holding down the valuation are risks with achieving double-digit sales growth. Long-term growth is rooted in cohesion between stakeholders, which management usually expresses through a commitment in core values – a company’s guiding north star. Without cohesion, both meaning and purpose can easily be lost. In Twitter's most recent 10-k financial filings, clearly expressed core values were missing. In addition, Twitter continues to lag behind the business trend in establishing carbon neutral goals. A board room wakeup call is needed, until then our position is to wait for the stock to drop below $25 a share before considering engagement.
*In 2019, IBM was awarded over 4,500 patents related to AI and quantum computing
** In 2021, celebrated over 105 years of uninterrupted dividends with 25 consecutive years of increases
* Both Ford and ADT plan to invest $100 Million into Canopy in the next three years, and open a funding round to bring in more automotive partners. Canopy is currently integrating machine learning algorithms to be able to send an alert if a person loiters near a vehicle, but not send an alert if a cat is at the vehicle.
** An average work vehicle carries $50,000 in gear. Each year motor vehicle related theft affects 230 per 100,000 vehicles, only half are due to owner error. How to Become the Most Innovative, Customer Centric, Inclusive, and Sustainable Company in the World6/17/2022
* Net Sales of $55 Billion in 2021, up 41% and 28% from 2020 and 2019.
** For 17 consecutive years Dow Inc has received a perfect score in the Human Rights Campaign (HRC) Corporate Equality Index. In 2021, they ranked on Fortune 100 Best Companies to Work For® list and ranked #19 in the Diversity Inc Top 50 Companies. *** Received the 2021 BIG Innovation Awards from the Business Intelligence Group
* Caterpillar also created a hybrid-hydrogen generator for customers who are geographically isolated and unable to consistently refill their generators with renewable hydrogen.
** Caterpillar posted $50.9B in revenue in 2021, from $41.7B in 2020, and doubled their net income from $3B to $6.5B in the last FY. |
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We are strategy consultants helping Sovereign Wealth Funds optimize investment strategies that leverage stakeholder values. Note: All blog comments containing hate speech will be deleted.
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