Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Investors may have overcapitalized the craft-brewing segment during the flurry of 'hot' IPOs, perhaps in part because analysts forecast such high growth rates for the
Investors may have overcapitalized the craft-brewing segment during the flurry of 'hot' IPOs, perhaps in part because analysts forecast such high growth rates for the segment. While each individual craft brewers valuation may seem reasonable, given the firms recent profitability and growth, the craft-brewing segment appears to be overcapitalized, given the total size, no growth forecast, and competitiveness of the domestic beer industry. This could be another 'hot', then 'crash' IPO industry, parallel to the biotech, computer disk drive, and perhaps segments of the Internet industry in the late 1990s, early 2000s. Thus, the question is how much growth is anticipated in the market values of the three craft brewers, and is that growth rate realistic given the structure of the domestic beer industry and the likely competitive responses of the big-three brewers
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started