Internet business valuation is a challenge because internet business has unique features and thus, needs to consider other issues than the traditional income statement and balance sheet numbers. Furthermore, many internet companies have generated negative accounting income in spite of extraordinarily high stock price. Given these circumstances, the advanced valuation model for internet business with consideration of the high growth potential capacity is apparently needed. This paper is designed primarily to review previous researches on the corporate valuation models as the theoretical background and then to select a possibly best-suited valuation model for internet business among the presented models. After having then outlined the theoretical framework through an analysis of the literature, the value drivers of the internet companies and the evaluation difficulty that can arise from them will be highlighted. Subsequently, the main evaluation methods used for Internet companies are analyzed: starting from the financial method and the multiples method, then analyzing more advanced methods such as Real Options and Eva.

Valuation of Internet Companies: methods compared

Ferraro, Olga
;
Rubino, Franco Ernesto;Aura, Francesca
2019

Abstract

Internet business valuation is a challenge because internet business has unique features and thus, needs to consider other issues than the traditional income statement and balance sheet numbers. Furthermore, many internet companies have generated negative accounting income in spite of extraordinarily high stock price. Given these circumstances, the advanced valuation model for internet business with consideration of the high growth potential capacity is apparently needed. This paper is designed primarily to review previous researches on the corporate valuation models as the theoretical background and then to select a possibly best-suited valuation model for internet business among the presented models. After having then outlined the theoretical framework through an analysis of the literature, the value drivers of the internet companies and the evaluation difficulty that can arise from them will be highlighted. Subsequently, the main evaluation methods used for Internet companies are analyzed: starting from the financial method and the multiples method, then analyzing more advanced methods such as Real Options and Eva.
Internet Company, valuation model, DCF, traditional method.
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/20.500.11770/294998
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