IDEAS home Printed from https://ideas.repec.org/a/vrs/foeste/v9y2010i1p105-120n12.html
   My bibliography  Save this article

Valuing Internet Companies. Selected Issues

Author

Listed:
  • Zarzecki Dariusz

    (Department of Investments and Business Valuation, Faculty of Economics and Management, University of Szczecin, Mickiewicza 64, 71-101 Szczeci)

Abstract

The internet business is one of the most dynamically developing sectors of the global economy. Internet companies attract ever higher investment despite elevated risk, therefore developing valuation methods adapted to their specificity is of growing importance. This article is an attempt at providing theoretical grounds for potential approaches used in the valuation of such companies. Some of the major difficulties arise from the following reasons: 1) in the early stages of development, internet companies, like many other start-up companies, generate losses or symbolic profits; 2) internet companies grow at a very fast rate (hundreds or thousands of percent p.a.); 3) the future of internet companies is very uncertain.The analysis of different valuation methods carried out in this article points to the conclusion that methods well grounded in theory, such as the Discounted Cash Flow and Real Options methods, have not lost any of their relevance in the "new economy". What is necessary however is to adopt a different approach to probability estimation and consider the internet companies' high flexibility in making business decisions when faced with dynamically changing market conditions. The article also addresses a crucial issue for the stock value of public internet companies - the investors' expectations and emotions.

Suggested Citation

  • Zarzecki Dariusz, 2010. "Valuing Internet Companies. Selected Issues," Folia Oeconomica Stetinensia, Sciendo, vol. 9(1), pages 105-120, January.
    • Handle: RePEc:vrs:foeste:v:9:y:2010:i:1:p:105-120:n:12
    DOI: 10.2478/v10031-010-0015-5
    as

    Download full text from publisher

    File URL: https://doi.org/10.2478/v10031-010-0015-5
    Download Restriction: no
    File URL: https://libkey.io/10.2478/v10031-010-0015-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Athanassakos George, 2007. "Valuing Internet Ventures," Journal of Business Valuation and Economic Loss Analysis, De Gruyter, vol. 2(1), pages 1-17, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rodríguez Vázquez Verónica Patricia & Aca Varela Jaquelina Marcela, 2010. "El flujo de efectivo descontado como método de valuación de empresas mexicanas en el periodo 2001-2007," Contaduría y Administración, Accounting and Management, vol. 55(3), pages 143-172, septiembr.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vrs:foeste:v:9:y:2010:i:1:p:105-120:n:12. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.sciendo.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.