Citations (6)


Footnotes (9)



Internet Valuations: The Case of Terra-Lycos

Pablo Fernandez

University of Navarra - IESE Business School

January 12, 2015

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

Download This Paper

Date posted: April 16, 2001 ; Last revised: January 13, 2015

Suggested Citation

Fernandez, Pablo, Internet Valuations: The Case of Terra-Lycos (January 12, 2015). 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
+34 91 357 0809 (Phone)
+34 91 357 2913 (Fax)
HOME PAGE: http://web.iese.edu/PabloFernandez/
Feedback to SSRN

Paper statistics
Abstract Views: 17,393
Downloads: 7,376
Download Rank: 381
Citations:  6
Footnotes:  9

© 2015 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.312 seconds