Valuation of Pre-profit Technology Companies Based on the Price-to-Sales Ratio and Black-Scholes Model: A Case Study of Beijing Phylisense Technology Co., Ltd.

Abstract

With the rapid development of the digital economy, the valuation of pre-profit technology enterprises has become increasingly prominent. However, traditional valuation methods are difficult to adapt to the characteristics of high R&D investment, negative earnings, and asset-light operations. This paper focuses on the valuation challenges of pre-profit technology companies by using Beijing Phylisense as a case study and constructs a combined valuation model integrating the Price-to-Sales (P/S) ratio method with the Black-Scholes (B-S) real options model. The study first analyzes the applicability flaws of traditional absolute valuation methods as well as Price-to-Earnings (P/E) and Price-to-Book (P/B) ratios. Subsequently, it develops a combined model of the P/S method and the B-S real options method, utilizing the P/S ratio to evaluate the existing entity value of the firm. The results indicate that this combined model can more comprehensively reflect the value of pre-profit technology companies and effectively compensate for the deficiencies of single valuation methods. The research in this paper provides new insights and methodologies for the valuation of pre-profit technology enterprises. Furthermore, it offers decision-making references for investors, corporate managers, and regulatory agencies, holding practical significance for the improvement of valuation systems for pre-profit technology companies.