Valuations of dot. coms: Some implications form the recent market plunge
Faculty of Business and Public Management
School of Finance and Business Economics
Internet companies have suffered a great loss in their market value recently, though their share prices were sky rocketing two years ago. This fact casts doubts on the credibility of the valuations of dot. corns and even the methods used in the valuations. This paper attempts to provide some analysis and insight to understanding these issues. The validity of the discounted cash flow models is addressed. The major difficulties in valuing dot.coms are discussed and some solutions are proposed to circumvent these difficulties. Finally, some valuation examples are presented to illustrate the key points in valuing dot.coms.