Research On IPO Valuation Of Internet Enterprises Based On Real Options

Since the 1990 s,one of the most important things in the world economy is the wide application of computer network technology in business activities and production and life.It has penetrated into various fields,greatly changing people’s living and working habits,production and operation mode.Over the past two decades,with the rise of the Internet economy,Internet enterprises have sprung up in large numbers,such as Tencent,Google,Amazon,and so on.Internet enterprises are playing an increasingly important role in today’s society and contributing more and more to economic development.However,their development prospects are uncertain and their investment risks are very high.How to accurately measure their value has become an urgent problem to be solved.Internet enterprises are in a flexible and changeable operating environment,and the openness of the Internet brings them flexibility value and strategic value,which results in underestimating the value of Internet enterprises when using traditional methods.How to evaluate the real intrinsic value of Internet enterprises should be the concern of many investors,so how to make the evaluation results closer to the intrinsic value of enterprises? The effective way to solve these problems is to create a scientific and reasonable valuation method.In order to protect the interests of Internet enterprises and their investors and strengthen the standardization of IPO pricing in capital market,the demand for scientific and reasonable valuation methods in the process of IPO is particularly prominent.Under this background,this paper explores the method of IPO valuation of Internet enterprises based on real options.This paper consists of five parts.The first part is the introduction,which introduces the research background of the paper,and leads to the urgency of the scientific valuation method of Internet enterprises’ IPO.By using the method of literature induction,this part does lots of research of the relevant theories and practical results of real options and IPO valuation at home and abroad.It is known that the current application fields of real options mainly focus on corporate strategy,value evaluation,project selection,product development,acquisition,merger and dismantlement.This paper also explores a new way to apply real options to the Internet enterprises’ IPO valuation.The second part is an overview of IPO valuation and real option theory of Internet enterprises.This part introduces the connotation and characteristics of Internet enterprises,the basic theory and ideas of IPO valuation of Internet enterprises,and the origin and basic connotation of real option.The third part is the construction of the real option model of Internet enterprises’ IPO valuation.Firstly,this part analyses the applicability of real option in Internet enterprises’ IPO valuation,and introduces the solution method of real option.Then,referring to the rational pricing of Internet enterprises originated by Schwartz and Moon,and it gives an approach to resolve model parameters.The fourth part is the application of MCS method,which introduces the case of Baofeng Group.Rational pricing model is simulated by Oracle Crystal Ball in this part.The fifth part is the effectiveness assessment and application prospect analysis of real options method.In the past,the practice of real option valuation method mostly focused on the traditional valuation fields,while this paper applies real option valuation method to the new field of IPO valuation of Internet enterprises.In order to evaluate company scientifically,the article puts forward MCS method,which can efficiently integrate mathematics model and application software.