NEW YORK, Jan. 9, 2014 /PRNewswire/ -- Kerrisdale Capital, a private investment management firm, has published a report on the inaccurate fully diluted share count of ServiceNow (ticker: NOW) being calculated by numerous equity research firms, resulting in widespread valuation mistakes. Kerrisdale believes that NOW shares are materially overvalued, a problem that is exacerbated by various sellside analysts reporting a figure of 138 million shares instead of the actual 165 million fully diluted share count.
Kerrisdale's groundbreaking expose can be found here: http://kerrisdalecap.com/commentary/2014/01/09/servicenow-now
Multiple sellside reports fail to include ServiceNow's 25.5 million option pool or the additional 4.8 million of restricted stock units, which leads to a market capitalization of $8.1bn at the current $58 share price. This market capitalization only reflects NOW's basic shares outstanding.
Based on NOW's 138.7 million shares of common stock, 25.5 million outstanding stock options with an average exercise price of $8.12, and 4.8 million restricted stock units, NOW actually has 165.4 million fully diluted shares outstanding and a market capitalization of $9.6bn.
"Sellside analysts ought to be able to calculate the fully diluted share counts of the companies they cover," said Sahm Adrangi, Chief Investment Officer of Kerrisdale Capital. "Many ServiceNow equity analysts would find that their target prices would be 20% to 30% lower if they calculated the correct fully diluted share count."
Kerrisdale previously wrote a report in November 2012 on NOW's valuation, potential market size, and software capabilities. Kerrisdale currently holds short positions in NOW.
About Kerrisdale Capital
Kerrisdale Capital Management, LLC is a fundamentally-oriented investment manager that focuses on long-term value investments and event-driven special situations. Kerrisdale has $300 million in assets under management and is based out of New York City.
CONTACT: Agnes Cao, 212-257-4385, email@example.com
SOURCE Kerrisdale Capital Management, LLC