Valuation of Internet-Related Companies

19 Pages Posted: 15 Apr 2001 Last revised: 26 May 2019

See all articles by Pablo Fernandez

Pablo Fernandez

University of Navarra - IESE Business School

Date Written: May 18, 2019

Abstract

La versión española de este artículo se puede encontrar en: http://ssrn.com/abstract=934324.

This paper will analyze the evolution of a number of companies (Terra, Amazon, America Online, Microsoft, B2B companies, online brokers...), although our focus will be the valuation of Amazon. We compare Damodaran's valuation by cash flow discounting ($35/share), Copeland's valuation by scenarios and cash flow discounting ($66/share) and our valuation by simulation and cash flow discounting: $21/share.

It is very interesting to compare and try to differentiate what Internet may signify in the first years of the 21st century with the revolutionary effect on society that the railways, freeways, airlines, radio, television and the telephone had when they first appeared. We also urge the reader to analyze the history of companies such as Levitz, Home Shopping Network, MCI, LTCM and Boston Chicken.

A website is not necessarily a business. Selling below cost gets you lots of customers, but not much money.

Keywords: Internet, Valuation, Amazon, Microsoft

JEL Classification: G12, G31, M21

Suggested Citation

Fernandez, Pablo, Valuation of Internet-Related Companies (May 18, 2019). Available at SSRN: https://ssrn.com/abstract=265609 or http://dx.doi.org/10.2139/ssrn.265609

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/

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