The Valuation of Internet Companies Based on Adjusted Black -Scholes Model

Abstract

With the continuous breakthrough of Internet technology, we can clearly see the huge growth space and potential profitability of related companies. However, due to their unique instant change and uncertainty, high returns and high risks exist simultaneously and finding new approaches different from traditional ones to evaluate internet companies is necessary and significant. Based on adjusted Black-Scholes Model, this study discusses three approaches: Metcalfe approach values internet companies that relies on user numbers. DCF approach and Fuzzy real option approach estimate internet companies with strong cash flow and long-period potential growth, focusing on probability and fuzzy theory separately.