Questions to be discussed in the report:
1. How does Facebook make money? What are the value drivers of its business? What is its
comparative advantage relative to other social networking companies?
2. Why is Facebook going public? What is the planned use of proceeds from the offering?
3. What was going on in the U.S. IPO markets prior to Facebooks offering? What has been the
performance of recent IPOs?
4. What is the intrinsic value of a Facebook share? How does this valuation compare to the price
talk from the underwriters?
5. As a potential shareholder, what are your concerns about Facebook or its stock offering?
6. What is your recommendation for the CXTechnology Fund?
Please make sure that your report
contains the following two sections:
Section 1: Executive summary: This section should never exceed a single page. In this section,
you should highlight the main takeaways of your analysis. This section should end with a couple
of sentences discussing your overall recommendation.
Section 2: Analysis: In this section, you can discuss your analysis and directly answer my
questions. There is a 5-page (1.5 space) limit of text in this section. If you would like to provide
tables or figures you can create an appendix at the end of this section. Tables and figures do not
count toward the 5-page limit. You MUST show all of your calculations in the appendix. Please
be prepared to produce the electronic Excel file in case I ask for it.
There are two determinants of quality: (1) analysis and (2) recommendation. Before doing your
analysis, please make sure that you fully understand the problem. This might not be trivial since
in a typical case you will be provided an ocean of information and you might lose track.
Moreover, often times a critical piece of information will not even be provided and as a result, you
will either have to make a set of reasonable assumptions or get what you need by doing research.
Once you clearly understand the problem, provide a thorough analysis.
Regarding your recommendation, first make sure that you have one. In each case, you will be
playing the role of a decision maker and you MUST make a decision. Playing safe with
recommendation will cost you (e.g. never say things like you do not know what to do or
anything is possible). Second, your recommendation must be internally consistent with your
analysis.
