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This study looks at the value-relevance of accounting data and measures of web-traffic for Internet firms listed on the Neuer Markt. We show that earnings and cash flows cannot explain the valuation of Internet companies, while we report a positive association between total sales and market capitalisation. In addition, sales and marketing as well as research and development expenses are relevant value-drivers. Furthermore, we find a positive relation between market values and a number of web-metrics such as customer loyalty, reach, page impressions, and unique visitors. We conclude that during the Internet bubble, measures of web-traffic provided at least as much explanatory power for market values as financial statement information.

With the opening of the Nouveau Marché in France in 1996, followed by the Neuer Markt in Germany in 1997 and the Nuovo Mercato in Italy in 1999, the opportunities for small companies to obtain a listing on European exchanges were growing rapidly. Other European countries with new stock markets included Belgium, Denmark, Finland, Greece, Ireland, the Netherlands, Poland, Portugal, Spain, Sweden and Switzerland. These stock markets had one common aim – to attract early stage, innovative and high-growth firms that would not have been viable candidates for public equity financing on the main markets of European stock exchanges. Of these new markets, the Neuer Markt emerged as Europe’s answer to NASDAQ.