Valuation Research Of Chinese Internet Enterprises Based On The Traditional Valuation Method And Metcalfe's Law

In 2018,the country publicly stated that it hopes that “Internet +” companies will return to A shares in the 13 th National People's Congress.This shows that Internet companies have a crucial influence on the national economy to a certain extent.And in recent years,China's Internet industry has given rise to astonishing power.The network economy has become the backbone of the increase in gross domestic product.The tremendous successes achieved by a series of Internet companies led by BAT not only spread the influence of China's Internet market to all parts of the world,but also promoted the rapid development of China's Internet industry,so that investors from all walks of life have focused their attention on the Internet industry.In such a capital market environment,the valuation of Internet companies naturally attracted everyone's attention.However,compared with other traditional industries,the Internet industry has a large proportion of intangible assets,high R&D expenditures,and continuous innovation in business models to satisfy user needs,which greatly increases the difficulty of valuation.So,it needs to be compared and analyzed that whether traditional valuation methods still apply to Internet companies' valuations,whether there is a correlation between monthly active users and Internet companies.Internet companies have a wide range of definitions.This article only focuses on Internet companies that provide Internet basic services,online business transactions,and Internet media to conduct valuation studies.Firstly of all,this paper research the current status of domestic Internet enterprises,and sorts out the development characteristics,business models and profit models of Internet enterprises different from traditional enterprises.Secondly,this paper expounds the traditional valuation methods and Metcalfe's law basic principle of valuation models and ideas,and its applicability in Internet enterprise valuation and limitations are discussed.Then,based on the traditional valuation model and Metcalfe's law,this paper takes the Chinese Internet enterprises listed on the Shanghai and Shenzhen stock indexes as samples.Testing the valuation period of EVA,DCF model and Metcalfe's law valuation model for the accuracy of Internet enterprise valuation in 2016,2015 and 2014.Finally,this paper applies EVA,DCF and Metcalfe's law valuation model to conduct case study on Tencent to further verify the empirical results.