Methodology Research On Financial Valuation Of Internet Companies

In the modern days,Internet economy has increased very fast,there are too many high valuaed innovative companies,mergers and acquisitions happened all the time.In the early stages of development,Internet companies rely mainly on continued high external funding to seize the market,their own profitability is very limited,but they always gained high valuation on the contrary.If we study valuation of Internet companies with traditional valuation system,we will find that the cash flow of Internet companies is very unstable and difficult to predict.We need to double test the applicability of the traditional valuation system requires Internet companies.First,this paper reviews the Western classical valuation methods,one is absolute valuation methods such as DCF model,one is the relative valuation method,such as P/E,P/B,P/S,EV/EBUTDA,and then analysised the application environment for each model.Secondly,this paper introduces the history and characteristics of the Internet industry,and analyzes the financial valuation of Internet companies basied on traditional valuation theory system and characteristics of the Internet.In view of the key factor of Financial valuation of Internet companies,this paper had found some model may matched,such as DEVA valuation model based on Metcalfe’s Law,Zipf’s law based on the Dunbar number,.Then the paper had found the key factors of financial valuation of Internet companies according to the life cycle theory and the Internet facts.Finally,this paper give their own suggestions for financial valuation studies of Internet companies based on the characteristics of various types of valuation model and features of Internet companies.