Selection Of Valuation Methods On Internet Unicorn Enterprises

In recent years,unicorn enterprises are more and more involved in the capital market activities.However,due to the particularity of Internet unicorn enterprises,the relevant valuation is still an urgent problem to be solved.This paper takes Netease as an example to discuss how to choose the most suitable valuation method for a target enterprise to conduct feasible and reliable valuation.Based on the analysis of the existing enterprise valuation,this paper discusses the selection criteria of valuation methods from the two aspects of the core elements of valuation methods and the core driving factors of Internet unicorn enterprise value.On the basis of reviewing the previous studies on enterprise valuation,this paper first introduces three types of enterprise valuation methods and their core elements,and then makes a comparative analysis of their applicability;Secondly,by introducing the current valuation situation of domestic Internet unicorn enterprises and the core driving factors of their value in different stages,it points out the difficulties in the valuation of Internet unicorn enterprises and the deficiencies of the existing valuation ideas;Then,the development stage and core value driving factors are judged by introducing the general situation,operation and financial status of Netease;Finally according to the above study of selection criteria,choosing DCF model to detailed analysis of the valuation of Netease,as well as Metcalfe derivative model and EV/EBITDA model for reference to verify the correctness of the above ideas.Through the case of Netease,the following conclusions can be drawn:(1)Netease is in the mature stage,the core value driver is profit,and the financial indicator with the highest quality is cash flow;(2)the core element and core index of DCF match Netease,so DCF gives the most accurate valuation result;(3)the core element of EV/EBITDA is revenue,and the core element of Metcalfe derivative model is the number of users,which don't match the current Netease value core driver,so the accuracy of the valuation is worse than that of DCF.(4)none of the three valuation methods can provide an absolutely accurate valuation of Netease.Therefore,in practice,one valuation method should be used as the main method and multiple methods should be adopted to obtain the final valuation result.In this paper,based on literature analysis,theoretical analysis and case analysis,there are following general suggestions for selection of valuation methods on Internet unicorn enterprise:(1)the core elements of valuation methods can be divided into three categories of users,revenue and profit.The valuation method that match the target enterprise value core elements should be chosen to ensure the valuation accuracy;(2)the core value drivers of Internet unicorn enterprises in the initial stage,growth stage and maturity stage are user value,revenue and profit,which should be paid attention to in valuation process;(3)all Metcalfe derivative model fit the characteristics of Internet enterprises very well,so in the future,the research and improvement of such models should be intensified.