The pitfalls of valuing internet stocks

As companies rush to catch the feel good vibe following the LinkedIn flotation, Financial News asks: how do you value an internet stock?

Question: A web company has 27 million unique monthly users, is the fifth ranked web domain in terms of page views, and serves more than 8% of all ads on the internet. How much is it worth?

Answer: The month is July 2005, the answer is $580m, and the company is Intermix Media, owner of MySpace.com, a hot new website launched just two years year earlier which integrated web profiles, blogs, email, photo galleries, classified listings and events.

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