Valuation of User-based Firms: The Case of Netflix Inc

Mathilde Meier Mysen & Amalie Antonette Foss

Student thesis: Master thesis


Digitalization has introduced an economy where numerous companies measure their success based on the network of users, rather than the cash flows. In this thesis, we aim to apply Netflix as a case study to find the most accurate valuation method for user-based companies. Subscribers, both new and existing, are essential value drivers in user-based firms. Thus, by using the User-Based Valuation framework constructed by Damodaran (2018), instead of Free Cash Flow through the Discounted Cash Flow model, we are better equipped to include these significant value drivers. Further, by using the User-Based Valuation, we are able to include other essential value drivers for user-based firms, namely the usage of Big Data and network effects, which enhances the subscribers’ value.

EducationsMSc in Applied Economics and Finance, (Graduate Programme) Final Thesis
Publication date2019
Number of pages140
SupervisorsSøren Plesner