Proceedings of the 2022 2nd International Conference on Economic Development and Business Culture (ICEDBC 2022)

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Application of Discounted Cash Flow Model in Company Valuation- A Case Study of Netflix

Authors
Huaying Wang1, *
1School of Management and Economics (SME), Beijing Institute of Technology (BIT), Beijing, China
*Corresponding author. Email: why020901@126.com
Corresponding Author
Huaying Wang
Available Online 31 December 2022.
DOI
10.2991/978-94-6463-036-7_270How to use a DOI?
Keywords
DCF valuation; Netflix; Linear Regression; CAPM; WACC
Abstract

In recent years, the Internet has profoundly changed the way people live, work and play in a form of rapid development. With this trend, the activities of Internet enterprises in the capital market are becoming increasingly frequent. How to use reasonable methods to value Internet enterprises has become an important issue. This paper discusses several existing enterprise valuation models and uses the discounted cash flow model to evaluate Netflix and estimates the enterprise value of Netflix based on the discounted cash flow model(DCF) and the capital asset pricing model(CAPM). The research used qualitative and quantitative methods to predict the financial data of enterprises, applying the linear regression method to predict the income and expenses of enterprises in the next six years, and qualitatively estimating the changes in the financial data of enterprises, and finally calculating WACC and corporate value. By comparing the data, this paper found that there are some differences between the calculated enterprise value and the official enterprise value, as well as some differences between the estimated debt to equity ratio and the expected ratio. This paper also discusses the reasons for the calculation differences, including the inherent defects in the application of the DCF model and the differences of data prediction.

Copyright
© 2022 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the 2022 2nd International Conference on Economic Development and Business Culture (ICEDBC 2022)
Series
Advances in Economics, Business and Management Research
Publication Date
31 December 2022
ISBN
10.2991/978-94-6463-036-7_270
ISSN
2352-5428
DOI
10.2991/978-94-6463-036-7_270How to use a DOI?
Copyright
© 2022 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Huaying Wang
PY  - 2022
DA  - 2022/12/31
TI  - Application of Discounted Cash Flow Model in Company Valuation- A Case Study of Netflix
BT  - Proceedings of the 2022 2nd International Conference on Economic Development and Business Culture (ICEDBC 2022)
PB  - Atlantis Press
SP  - 1808
EP  - 1815
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-036-7_270
DO  - 10.2991/978-94-6463-036-7_270
ID  - Wang2022
ER  -