Digest Finance
 

Capitalization of International Uniсorn Companies: To What Extent Is It Reasonable?

Vol. 23, Iss. 1, MARCH 2018

PDF  Article PDF Version

Received: 11 December 2017

Received in revised form: 25 December 2017

Accepted: 16 January 2018

Available online: 30 March 2018

Subject Heading: FINANCE OF ORGANIZATIONS. ANALYSIS OF ACCOUNTING SYSTEMS

JEL Classification: F21, F36, F41, F63

Pages: 63–67

https://doi.org/10.24891/df.23.1.63

Butuzova A.S. Lomonosov Moscow State University, Moscow, Russian Federation
butuzova_nastena@mail.ru

https://orcid.org/0000-0003-0759-5660

Importance The article addresses unicorn companies as the most successful and fastest-growing start-ups. It analyzes to what extent their capitalization is justified, what prospects for growth they have after IPO, and how they meet investors' expectations.
Objectives The objectives of the study include a comprehensive review of creation and development of unicorn companies, identifying the sources of their growth and credibility of their open market valuation.
Methods The study employs methods of analysis, synthesis, retrospective analysis, comparison, and compilation.
Results The paper shows why unicorns are overvalued in the market. It emphasizes that the possibility and expediency of unicorn capitalization depends on the interests pursued by market actors. The practicability of IPO and its implications also vary from company to company.
Conclusions and Relevance High capitalization of unicorn companies is not reasonably feasible in every instance: investors are often riding on the wave of a boom, after which the value of business falls to zero. However, high-tech and innovative unicorns, on the contrary, are drivers of development and their high capitalization is indeed justified.

Keywords: unicorn company, capitalization, IPO, securities market, venture capital

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