Lululemon IPO

[ahnuld]

Company went public on friday. Im interested in investing as I feel they have yet to catch on in most of the United States and they should fare well if Canada is any indication. However it seems hard to come by any form of future estimates. So far to value the company iv had to plain old guess future earnings growth, and tried to use multiple comparisons when similar companies such as Under Armour went public (mainly based off sales). Am I missing a source of info or are IPOs always a bit of a shot in the dark?


Side: Its been a long summer; when discounting a growing company where the short term growth rate is higher than the discount rate...how do I change my equations so I dont get infinity as the valuation.

[ahnuld]

afternoon bump

[hawk59]

It's not a shot in the dark. I see 67.5mm shares out @ $30 for a $2bn market cap. If you want a 10% return on a $2bn market cap then they need to eventually earn $200mm in net profit from now until the end of the world, if you want a 15% return they need to earn $270mm. In 2006 they had $148mm in total revenues and $7.6mm in net income. Assume they'll have 15% net margins, which would be pretty good for this business. They would need $1.33bn in sales to earn $200mm. Roughly 3x as big as Under Armour is. Yeah it seems simplistic but that is how the math works out and the math always wins in the long term.

[ahnuld]

where did you find that total number of shares? Im pretty sure they issues 18.2 million...

[ahnuld]

link to the prospectus if anyone wants to take a look.

http://www.sec.gov/Archives/edgar/da...e424b4.htm#101

[hawk59]

page 5 of the prospectus

[ahnuld]

so they are offering 18.2 million shares to the public out of a total of 67.5 million? If so, yeah, it does seem pretty overpriced after today.

[citanul]

lol @ "they have yet to catch on in the US" dude, like every female in chicago owns a closet of this [censored].