The Research On Valuation Of Chinese Internet Companies

Internet industry has great potential and is full of investmentopportunities. However, due to the special nature of some businessmodels of the Internet industry, some traditional valuation methods willno longer apply to the Internet companies. The paper, focusing on variouscharacteristics of the Internet industry, introduces one innovativevaluation method for Internet companies.In the paper, firstly, the operating characteristics of the Internetcompanies are described, and the Internet industry’s business models areclassified and analyzed in detail. Then, the paper points out theapplicability and limitations of several traditional valuation methodswhenthey are applied to Internet companies.Subsequently, the paper describes auser-value based valuation method which is built upon the concept ofcustomer lifetime value. At last, the paper performs a case study to verifythe innovative valuation method byusingSINAWeibo as an example. Aftercomparing the calculated result with the actual IPO price, the paperconcludes that the new method is reasonable and reliable.