Which, Gaap or Non-Gaap EPS, will prevail in Valuation in the case of RSU (Stock-Based Compensation) during and after vesting period?

Subject:

Which, Gaap or Non-Gaap EPS, will prevail in Valuation in the case of RSU (Stock-Based Compensation) during and after vesting period?

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RSU (Stock-Based Compensation) vesting periods typically last three to five years, with a 4-year schedule being the most common standard in many industries.

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Let’s say the vesting period is 4 years.

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Diluted Gaap EPS will prevail in valuation during the 4 years vesting period causing intrinsic value tumbling.

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During the 6th year and onwards, fully dilution of fully settled RSU will take place, Both Diluted Gaap EPS & Diluted Non-Gaap EPS are fixed and recovered drastically; Diluted Non-Gaap EPS will prevail in valuation causing intrinsic value shooting up significantly.

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Remark:

Since the RSU (SBC) award is a common practice nowaday and continual, investors may consider to take the arithmetic or geometric average of the two in respective intrinsic valuation processes if decided to hold the stock for more than the 4 years RSU (SBC) vesting period.