Social media affects business valuation
Aug 03, 2011 Karen Umpierre
When considering the valuation of a company, the Internal Revenue Service suggests taking into account the property, assets, business nature, risk and stability of revenue. Often it can be tough to gauge business valuation because there are so many outlying factors. Currently, Apple stock is trading at $394 per share. However, its valuation may be easier to calculate because the company has physical assets, as well as clients purchasing its products. But take into consideration a company such as Pandora which makes absolutely no profit, yet because of its huge customer interaction, its stock is worth approximately $15 per share. Some may view this as an overrated market share value, but the factors affecting business valuation have been altered by today's world of social networks and media integration. Business valuation was once mainly based on property, service, product, stock and sales – today, the worth of a company shifts on the number of people that visit an online company's website. Benefiting greatly from this are large social networks such as Facebook and Twitter to which advertisers seek an abundance of viewers.