Streaming Media Company Evaluation Method And Application

This paper focuses on IQIYI,a streaming media company.Based on the network economy theory and platform economy theory,this paper analyzes the business model,the financial position,the competition situation,the innovative efforts and the potential risk of the company.User value method,discount cash flow method and relative valuation method are adopted in the evaluation application of IQIYI.IQIYI starts from 2010.With forward-looking vision,it leads the industry direction in terms of payment pattern and original content.IQIYI's asset and revenue is expanding rapidly,but the challenge is short of profitability and over-dependence on external financing.In the future,IQIYI should focus on accumulating content assets,enlarging the scale of users and increasing payment penetration,so as to narrow the gap of free cash flow and enhance its earning ability.Discounted discount method is not applicable to IQIYI.Because of the large expenditure on copyright and original content,its free cash flow will be negative for a long time in the future.In the application of user value method,this paper selects Netflix as a reference company.As to relative valuation method,the analysis is on price-to-sales basis and Netflix,Bilibili,Spotify and Tencent Music are chosen as comparable companies.According to the evaluation results,the fair value of IQIYI is about 1.56 to 1.69 billion US dollars.This paper has high practical value for the research of streaming media companies.In terms of valuation,the combination of relative valuation method and user value method is applicable for the industry.As for business model,streaming media companies should make timely adjustments to be forwardlooking.Besides,the marginal effect of content is obvious.Companies may achieve economies of scale,as content assets expending.