Firm valuation from customer equity: When does it work and when does it fail?

Is customer equity a good proxy for a firm's market value? Using data from Netflix over 10 years, I provide evidence that a CLV-based customer equity model tracks market capitalization remarkably well under versatile conditions of stable growth, profit volatility, and even a broad market crash. However, if a firm shifts business model through radical innovation, the customer equity model requires recalibration to continue tracking market capitalization.