Research on the Valuation of Internet Companies Based on Metcalfe’s Law

Abstract

This paper employs Metcalfe's Law to study the valuation issues of social network platform companies, using Kuaishou as a case study to validate the model, thereby providing new insights for the valuation of such companies. First, the paper outlines the background and significance of researching these companies, summarizing the content and approach of the study. It then discusses the challenges in valuing internet companies and determines the use of a modified Metcalfe model for research. Finally, Kuaishou is selected for valuation analysis, leading to the following conclusions: (1) User scale is a source of value for social network platform companies but not the sole determining factor. (2) The Metcalfe model can approximately reflect the value trends of social network platform companies, but it is not perfectly suited for the valuation of all such companies.