Using Real Option Model to Evaluate Movie Investments Based on Social Network

The world of mouth(WOM) plays a fundamental role in consumer decision-making, further influences corporations' future revenue., the estimation of future cash flow is an important factor when a company makes investment decisions. The common estimation is based on history revenue records, which is lack of validity. When deciding to see a movie, a consumer commonly goes to social platforms to check its rating, comments. WOM is a proper way to estimate future cash flow. This paper proposes a regression model between movies' box office, its WOM (panel data from social platforms like Weibo, douban) by using PVAR method,, applies the model to the Black-Scholes real option pricing model, NPV pricing model,, finally concludes the total value of movie projects. So this paper provides the investors with constructive investment advice based on social network, financial analysis, contributes to new financial models associated with big data.