Question
Our Space is a social media site that is growing in popularity. The firm has been around for a few years and has created a
Our Space is a social media site that is growing in popularity. The firm has been around for a few years and has created a nice market niche for itself. In fact, it actually turned a profit last year, albeit a fairly small one. After doing some basic research on the company, you've decided to take a closer look. You plan to use the price-to-sales ratio to value the stock, and you have collected P/S multiples on the following social media companies:
Company P/S Multiples Facebook 13.64 Snap 18.74 Twitter 13.45
Find the average P/S ratio for these three firms. Given that Our Space is expected to generate
$30
million in sales next year and will have
15
million shares of stock outstanding, use the average P/S ratio you computed above to put a value on Our Space's stock.
ANWSER 1 and 2 to:
1. The average P/S ratio for the 3 firms is enter your response here. (Round to two decimal places.)
2. The value of Our Space's stock is $enter your response here. (Round to the nearest cent.)
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