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Momo Weibo iQIYI 10,439 28,350 n/a 27,064 23,551 13,822 15,515 61,058 14,590 18,413 30,026 37,826 39,796 19,403 25,847 n/a 18,738 36,263 The majority of Internet companies experience fast growth in sales revenue but face negative net income – their business model are yet to be proven profitable (Demers & Lev, 2000). P/E ratio is thus a not good measure here for our comparison. As Internet companies generate substantial proportion of their revenue from advertising services, in many cases, web traffic and web usage plays an important role in determining the company’s revenue (Keating, Lys, & Magee, 2003; Trueman, Wong, & Zhang, 2001). Their relative importance and high explanatory power over Internet companies’ estimated revenue, and subsequently value, justify the choice of using MAU as an important factor in the analysis. Though not always cash flow positive, the chosen companies do experience a stable revenue growth. Given the characteristics of Internet companies, we chose to use P/S here as the metric for comparison. We can see that the value of Douyin estimated under the CCA method has a lower and higher bound of 10.39 billion and 26.98 billion US dollars, respectively. This makes up approximately 14% to 36% of ByteDance’s current valuation, 75 billion US dollars. While Douyin contributes to almost 40% of the company’s total revenue in 2018, we would suggest that Douyin’s sales multiple is rather at the higher end among the that of the comparable companies. Looking again at Figure 21, we observe that there is still a lot of space for Douyin’s revenue to grow in the upcoming years – it is highly probable that Douyin could gain up to 4.5 billion USD. This would support a valuation of Douyin at 17 billion USD in the case of low sales multiple like Momo and 45 billion USD in case of a sales multiple as high as Weibo’s. - 59 -PDF Image | Analysis of ByteDance with a close look on Douyin TikTok
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