Value Evaluation of PDD Based on DCF Model

DOI

10.2991/aebmr.k.220603.141How to use a DOI?

Keywords

PDD; Improve the DCF model; GMV; Free Cash Flow; Enterprise Value Assessment

Abstract

Pinduoduo(PDD) is one of the representatives of Internet e-commerce companies that have developed in recent years, and PDD created a successful and innovative business model of social e-commerce. Compared with the traditional e-commerce model, social e-commercehas certain competitive advantages in the depth of channels and the speed of commodity circulation. As a result, investors and shareholders will always have high hopes for PDD’s market capitalization and consider the reported market capitalization to be low. For PDD, because Internet e-commerce companies have novel business models, non-linear profit growth, and other characteristics that are different from traditional companies, various factors need to be integrated into the evaluation. This paper incorporates non-financial factors into the evaluation system and calculates the final value of the company based on the DCF model through adjustment coefficients, thus forming a new Internet company valuation idea. This paper uses the improved DCF model to value PDD and compares the valuation results with the actual market value of PDD on the evaluation day to prove whether the value of PDD is undervalued. The following two inspirations are obtained from this case study: First, the appraiser should fully consider the impact of non-financial factors on the company’s value when valuing new Internet companies, to make appropriate adjustments to the valuation model to achieve the purpose of the evaluation; second, the decision of shareholders and investors should be based on a complete understanding of the company’s value. Judgments must not only be made based on financial metrics, but also non-financial factors.

Copyright

© 2022 The Authors. Published by Atlantis Press International B.V.

Open Access

This is an open access article distributed under the CC BY-NC 4.0 license.

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TY  - CONF
AU  - Zihan Tang
PY  - 2022
DA  - 2022/07/01
TI  - Value Evaluation of PDD Based on DCF Model
BT  - Proceedings of the 2022 2nd International Conference on Enterprise Management and Economic Development (ICEMED 2022)
PB  - Atlantis Press
SP  - 860
EP  - 867
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.220603.141
DO  - 10.2991/aebmr.k.220603.141
ID  - Tang2022
ER  -