Crocs, Inc

14 Pages Posted: 5 Apr 2010 Last revised: 9 Apr 2018

See all articles by Marc L. Lipson

Marc L. Lipson

University of Virginia - Darden School of Business

Gaurav Gupta

Lovely Professional University

Abstract

This case forces students to examine the drivers of value, particularly growth and margins. It is also effective at drawing attention to the relationship between terminal value assumptions and value creation—assumptions that generate a large sensitivity of terminal value to growth rate are assumptions that imply that a great deal of value can still be created from investments after the planning horizon. The narrative features an analyst who is trying to make sense of a sharp one-day decline in the price of Crocs stock. A teaching note and student and instructor spreadsheets are available.

Excerpt

UVA-F-1589

Rev. Mar. 29, 2018

Crocs, Inc.

Looks like a bit of an overreaction in the marketplace.

—Crocs CEO Ron Snyder on Crocs's 36% stock price decline

It wasn't just Crocs, Inc., CEO Ron Snyder who was surprised by the sudden meltdown in the company's stock price on November 1, 2007. Analyst Stacy Yeung at Rockwood Asset Management had been a fan of the company for some time and had been the driving force behind Rockwood's notable accumulation of Crocs holdings. She had carefully followed Crocs since it first went public in February 2006. She believed from the beginning that Crocs had created a sustainable new brand, and the sixfold increase in Crocs's stock price from its initial offering to its high at the end of October had confirmed her judgment. While her faith in the Crocs brand was not necessarily shattered by the stock's precipitous one-day decline, she realized it was time to take a fresh look at her core assumptions about Crocs's future prospects and try to make sense of the market's recent valuation.

. . .

Keywords: value, margins, growth analysis, stock assumptions

Suggested Citation

Lipson, Marc Lars and Gupta, Gaurav, Crocs, Inc. Darden Case No. UVA-F-1589. Available at SSRN: https://ssrn.com/abstract=1583742

Marc Lars Lipson (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4837 (Phone)
434-243-5021 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/lipson.htm

Gaurav Gupta

Lovely Professional University ( email )

Phagwara, kashmir 190009
India

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