Based On The Metcalfe Law Of Internet Enterprise Valuation Research

With the changing of Internet industry of each passing day,the intrinsic value of internet enterprises has already become the focus of investors;especially,the current merger and acquisition boom in Internet industry rise again which makes demand for rational Internet enterprises valuation more urgent of investors.In fact,most of the Internet giant enterprises in the world at the beginning of the creation make a loss,and then slowly grow into a world-class enterprise.Why do investors are optimistic on these loss-making companies and are willing to give huge investment?The possible reason is that they look to future increase,resources and innovation pattern of these companies,and etc.However,how to rationally value these internet companies that have litter even negative profit is still a bothering question in academic circles.The main purpose of the paper is to find an enterprise valuation method that applies Internet companies.The focused problems needed to be solved are follows:(1)Under the condition of distortion of the Internet enterprise financial indicators,which influence factors should be chosen to calculate the value of Internet companies?(2)Why there is a larger gap between the share exchange ratio and market value when the Internet enterprises merger?(3)What are valuation methods of calculating share exchange proportion and whether does it apply to Internet companies?In the first,the paper makes the definition of the Internet economy,characteristics,and point out the differences between the traditional industry economy;Besides,make an introduction of Metcalfe law and its development and improvement process,and then compare with traditional enterprise valuation method,after that,as the breakthrough point,we put forward an innovative use of Metcalfe law idea;Finally,this paper uses the case analysis,through merger by stock exchange between Ctrip and Qunar cases,to validate the applicability of Metcalfe law to Internet enterprise value evaluation and calculate the value of Ctrip at the end of 2016,which shows that the main factors affecting the Internet enterprise value may be the users number and other non-financial indicators.