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Happy Wednesday, future bankers!

Hope that recruiting has been going well for everyone! Today we’re going to be talking about time periods for DCFs, how to articulate your greatest accomplishment, and what caused Snapchat’s stock to plunge 35%.

🚀 Let’s get into it.

🔢 Technical Question

“What is a typical time period to use for a discounted cash flow analysis? Why?”

Example Response:

"When conducting a DCF analysis, the ideal timeframe for cash flow forecasts can vary depending on the specific company and industry. While 5-10 years is a common range, it's not a one-size-fits-all approach.

For mature companies with stable growth, a perpetuity growth model with a long-term growth rate might be more suitable. Conversely, for young, high-growth companies, scenario planning could be helpful to account for uncertainties.

The 5-10 year window reflects the balance between capturing the company's potential and the inherent difficulty of accurate long-term predictions. Estimating even 3 years out can be challenging. Imagine predicting the business landscape 10 years from now compared to the drastic changes since 2014, with advancements like AI and the rise of remote work.

Therefore, it's crucial to consider several factors when choosing a timeframe. Analyzing historical trends, understanding industry dynamics, and assessing company maturity are all essential.

Ultimately, the optimal timeframe should be based on a well-reasoned analysis, ensuring the chosen period adequately reflects the company's value creation potential while acknowledging the inherent limitations of long-term forecasting."

By adding depth, acknowledging alternative approaches, and emphasizing the importance of case-specific analysis, you can deliver a comprehensive and well-considered response that showcases your understanding of a DCF and its nuances.

🗣 Behavioral Question

"What’s your greatest accomplishment? Why?"

When answering this question, remember to:

1. Choose a relevant accomplishment: Select an achievement that demonstrates skills and qualities valuable in investment banking, like analytical thinking, problem-solving, teamwork, or initiative.

2. Focus on the "why": Don't just describe the accomplishment; explain what made it meaningful to you and why it's significant.

3. Quantify results and impact: When possible, highlight measurable outcomes of your achievement to showcase your results-oriented approach.

4. Tailor your answer to the company and role: Connect your accomplishment to the specific skills and values sought by the interviewer.

Example Response:

"My greatest accomplishment to date was walking onto my college track team as a high jumper. While I wasn't initially recruited, I had always been fascinated by the sport and dreamt of competing at the collegiate level. However, I knew I didn't quite meet the standard qualifying marks. So, I decided to take initiative and approach the coach directly. I presented him with a personalized training plan showcasing my dedication and outlined my strategy to improve my jump height. Impressed by my passion and commitment, he gave me a chance to try out.

Through months of rigorous training, overcoming self-doubt, and constantly pushing my limits, I managed to surpass the qualifying mark and secure a spot on the team. This experience taught me the power of perseverance, discipline, and exceeding expectations. It instilled in me a strong work ethic, the ability to thrive under pressure, and the importance of setting ambitious goals. These are all qualities I believe are essential for success in investment banking, and I'm confident I can bring the same level of dedication and drive to contribute to your team."

Key points:

• The accomplishment showcases initiative, drive, and goal-setting.

• The candidate explains the "why" and connects it to relevant skills for investment banking.

• They mention a quantifiable outcome (making the team) to demonstrate impact.

🗞 Industry News

Snapchat Stock Plunges 35% 📉

Snap's stock plummeted 35% after missing revenue expectations for the sixth time in eight quarters. The company reported Q4 revenue of $1.36 billion, falling short of analyst estimates, and projected an even wider adjusted EBITDA loss than anticipated. While Snap claims this loss will come alongside faster revenue growth due to "investment plans," investors are losing patience with the company's turnaround struggles.

Snap's stock had surged 60% in recent months on hopes of a comeback, but Tuesday's report sparked a sell-off, marking the seventh consecutive earnings report where the stock has dropped. Analysts point to the company's inability to effectively monetize AI engagement and underwhelming advertising performance compared to competitors. Furthermore, a lack of specific results regarding MyAI, Snap's AI chatbot, raises concerns about the company's investment strategy and its path to profitability.

With Snap trailing its social media peers in both revenue growth and profitability, investors are questioning whether the company can carve out a sustainable position in the market. With giants like Google and Meta demonstrating stronger performance and further investments planned, the doubt regarding Snap's ability to compete and achieve long-term profitability is casting a long shadow over its future.

Read more about this story below.