IT companies: the specifics of social networks valuation

TL;DR

This paper examines the unique features of social networks that influence their valuation, analyzing methods like discounted cash flow and multipliers through case studies of six major platforms.

Contribution

It identifies specific features affecting social network valuation and evaluates valuation methods applied to six prominent social networks.

Findings

Features influencing social network valuation are identified.

Valuation methods like DCF and multipliers are analyzed.

Practical assessment of six social networks is conducted.

Abstract

The study discusses the main features which affect the IT companies valuation on the example of social networks. The relevance of the chosen topic is due to the fact that people live in the information age now, and information technologies surround us everywhere. Because of this, social networks have become very popular. They assist people to communicate with each other despite of the time and distance. Social networks are also companies that operate in order to generate income therefore their owners need to know how promising and profitable their business is. The social networks differ from traditional companies in this case the purpose of the research is determining the features of social networks that affect the accuracy and adequacy of the results of company valuation. The paper reviews the definitions of information technology, social networks, history, types of social networks, distinguishing features based on domestic and foreign literature. There are analyzed methods of assessing the value of Internet companies, their characteristics and methods of application. There is the six social networks evaluation was assessed in the practical part of the study: Facebook, Twitter, Pinterest, Snapchat, Sina Weibo and Vkontakte on the basis of the literature studied and the methods for evaluating the Internet companies which recommended in it, including the method of discounting the cash flow of the company as part of the income approach and the multiplier method as part of a comparative approach. Based on the analysis, the features that affect the social networks valuation are identified.