Question

Should I use Three Stage FCFE model to caculate the valuation of internet search firms like GOOGLE and BAIDU?

Answer 1

what else would you use?

Answer 2

Though ihaven't looked at the earnings trends, you may also be able to consider the H-Model

Answer 3

Use the higrowth.xls spreadsheet. You need to be able to change margins over time.

Answer 4

Thanks, professor. the higrowth model assumes the company has negative earnings. but Baidu already has positive earnings. does it work?
Also, if I use Relative Valuation method, which multiples should I use for Internet company? PEG?