Valuation Analysis Of Internet Company Based On Real Option

In recent years,the "Internet +" economy has developed rapidly in China.Internet companies participate in capital activities such as listing,acquisition,mergers,and restructuring more frequently.Based on this,using appropriate methods to evaluate the real intrinsic value of listed Internet companies has become a major concern for many M&A participants and investors.However,Internet companies are quite different from traditional enterprises.They have the characteristics of customer stickiness as the core resource and competitive advantage,huge impact on technology level,innovative business model and extremely uncertain external competition environment.This makes the valuation of Internet companies face many obstacles.Firstly,at the theoretical level,this paper analyzes the applicability of traditional valuation methods to the valuation of Internet companies,and expounds the limitations of commonly used relative valuation methods and absolute valuation methods.Based on the high-tech,high-risk,high-yield,high-growth business characteristics and value characteristics unique to Internet companies,we choose to conduct research based on the perspective of real options.And because the Internet companies in a mature and stable period have the general characteristics of traditional enterprises,the viewpoint of this paper is to combine accounting methods with financial models.That is,using the Free Cash Flow for the Firm discount method(FCFF)to assess the current value of the company's existing assets,using the real option model(B-S model and binary tree model)to assess the potential option value of the enterprise,and add the two to obtain the overall evaluation value of the Internet company.Then,at the practical level,this paper selects one of the 11 unicorn companies that successfully listed in 2017 to read the technology as a typical case study of valuation research in the Internet digital reading industry.Firstly,it systematically analyzes the case enterprises from the aspects of industry background,business performance and financial indicators,and then applies the combined valuation model constructed in the previous section to estimate the overall intrinsic value of IReader Technology.Finally,we analyze the rationality of the valuation results,and get the research conclusions.Finally,the paper argues that the traditional valuation method ignores the potential value of Internet companies.The introduction of the real option model can correct and compensate for the existing defects.The combination model based on the combination of accounting methods and financial models is applicable to the valuation of Internet Digital Reading Companies.