Abstract

http://ssrn.com/abstract=265608
 
 

Citations (6)



 
 

Footnotes (9)



 


 



Internet Valuations: The Case of Terra-Lycos


Pablo Fernandez


University of Navarra - IESE Business School

November 23, 2013


Abstract:     
In this paper, we review twelve valuations of Terra performed by Spanish and non-Spanish bank analysts and brokers.

Of the twelve valuations, only one used cash flow discounting. Another valuation was based on multiples, but also used cash flow discounting to perform a reverse valuation. All others used several multiples. Only one valuation report recommended to sell.

Terra started trading on the stock market in November 1999. The placement price was 13 euros per share (11.81 for retailers). In February 2000, its price stood at 139.75 euros. Between November 1999 and February 2000, Terra provided a return of 975% for its shareholders. However, by December 2000, the share price had plummeted to 11.6 euros, 8.3% of its February high. The average annual volatility of the Terra share was almost 100%.

If you can't find a rational explanation for a share to continue rising, you can be sure that it will fall. To become a millionaire, you must sell your shares at the right time. A website is not necessarily a business. Selling below cost gets you lots of customers, but not much money.

Number of Pages in PDF File: 12

Keywords: Internet, Valuation, Internet valuation

JEL Classification: G12, G31, M21

working papers series


Download This Paper

Date posted: April 16, 2001 ; Last revised: November 28, 2013

Suggested Citation

Fernandez, Pablo, Internet Valuations: The Case of Terra-Lycos (November 23, 2013). Available at SSRN: http://ssrn.com/abstract=265608 or http://dx.doi.org/10.2139/ssrn.265608

Contact Information

Pablo Fernandez (Contact Author)
University of Navarra - IESE Business School ( email )
Camino del Cerro del Aguila 3
28023 Madrid
Spain
+34 91 357 0809 (Phone)
+34 91 357 2913 (Fax)
HOME PAGE: http://web.iese.edu/PabloFernandez/
Feedback to SSRN


Paper statistics
Abstract Views: 15,587
Downloads: 6,548
Download Rank: 403
Citations:  6
Footnotes:  9

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo2 in 0.438 seconds