Dot-com bubble

Extracted Attributes

• Peak Date

  2000-03-10

• Alternate Names

  Dot-com boom, Internet bubble, Tech-media-telecom (TMT) bubble

• Failed Entities

  Pets.com, Webvan, Boo.com, WorldCom, NorthPoint Communications, Global Crossing

• Estimated Market Loss

  Over $5 trillion USD

• Nasdaq Rise (1995–2000)

  600% increase (from under 1,000 to over 5,000 points)

• Nasdaq Decline (2000–2002)

  78% decrease from peak

Timeline

• Rapid expansion of internet startups begins as the Nasdaq Composite starts surging from under 1,000 points. (Source: Investopedia)

  1995-01-01

• theGlobe.com executes its initial public offering, surging 606% on its first day of trading during the height of tech IPO mania. (Source: SoFi)

  1998-11-13

• The Nasdaq Composite index peaks at over 5,000 points before triggering the onset of the crash. (Source: Wikipedia)

  2000-03-10

• Widespread bankruptcies sweep through dot-com companies, leading to over $5 trillion in market losses. (Source: EBSCOhost)

  2001-12-31

• The Nasdaq Composite hits its post-bubble trough, marking a 78% decline from its March 2000 peak. (Source: Wikipedia)

  2002-10-31

• Bankrupt dot-com era telecom giant WorldCom is restructured and renamed MCI Inc. (Source: Wikipedia)

  2003-01-01

• MCI Inc. (formerly WorldCom) is acquired by Verizon. (Source: Wikipedia)

  2006-01-01

Dot-com bubble

The dot-com bubble (or dot-com boom) was a stock market bubble that developed during the late 1990s and peaked on March 10, 2000. This period of market growth coincided with the widespread adoption of the World Wide Web and the Internet, resulting in a dispensation of available venture capital and the rapid growth of valuations in new dot-com startups. Between 1995 and its peak in March 2000, investments in the Nasdaq Composite stock market index rose by 600%, only to fall 78% from its peak by October 2002, giving up all its gains during the bubble. It is also known retrospectively as the tech–media–telecom (TMT) bubble, since it boosted established companies in those sectors as well as Internet startups. During the dot-com crash, many online shopping companies like Pets.com, Webvan, and Boo.com, as well as several communication companies, such as WorldCom, NorthPoint Communications, and Global Crossing, failed and shut down; WorldCom was renamed to MCI Inc. in 2003 and was acquired by Verizon in 2006. Others, like Lastminute.com, MP3.com and PeopleSound were bought out. Larger companies like Amazon and Cisco Systems lost large portions of their market capitalization, with Cisco losing 80% of its stock value.

Web Search Results

• Dot-com bubble | Economics | Research Starters | EBSCOhost

  The Dot-com bubble refers to a significant economic phenomenon that occurred in the late 1990s and early 2000s, characterized by the rapid rise and subsequent fall of internet-based companies' stock prices. Initially fueled by investor optimism about the potential of the internet, companies received substantial venture capital, leading to extravagant spending on marketing and infrastructure. Many investors overlooked traditional profit assessments in favor of soaring stock valuations, which became unsustainable. The bubble peaked in March 2000 when the NASDAQ Composite index surpassed 5,000, but a shift in economic conditions, including rising interest rates, triggered a sharp decline in stock prices. By 2001, numerous companies faced bankruptcy, and the market lost over $5 trillion in [...] Publication Type: Academic Journal ## Full Article Internet-based companies reached their peak stock market value in the early 2000s. In what has been dubbed the dot-com bubble, the stock prices of Internet companies soared during this time as investors forecasted the vast potential of the World Wide Web. They were encouraged by the confidence many placed in the flourishing Internet industry. As a result of such confidence, many were careless with their analyses and ignored the usual assessments involved in stock market investing. When many of the dot-com companies failed to thrive, investors lost millions of dollars. [...] 4 of 4 ## Full Article Internet-based companies reached their peak stock market value in the early 2000s. In what has been dubbed the dot-com bubble, the stock prices of Internet companies soared during this time as investors forecasted the vast potential of the World Wide Web. They were encouraged by the confidence many placed in the flourishing Internet industry. As a result of such confidence, many were careless with their analyses and ignored the usual assessments involved in stock market investing. When many of the dot-com companies failed to thrive, investors lost millions of dollars.

• 4. The Dot-com Bubble | Profit over Privacy | Manifold@UMinnPress

  The dot-com bubble generated a kind of marketing/finance feedback loop in which the most important business competency was attracting investment capital. This was achieved to a significant degree through advertising and public relations, whereby companies sought to demonstrate their potential to become dominant in a given online market: to get big fast. Dot-coms with a strong market position and favorable media profile found it much easier to attract investors, while securing risk capital through IPOs and other means was deployed as a public relations event in its own right. At the same time, companies that had secured investment funding spent heavily on advertising to further build market share and enhance brand image, which in turn aided more fundraising. This feedback loop between [...] The bubble also played an important role in generating early demand for internet advertising. Brimming with investment capital, dot-com start-ups were among web advertising’s biggest spenders. This helped legitimize the medium for traditional marketers who began to move online in earnest during the bubble’s later stages. Large internet advertising outlays were rationalized through a new economy discourse in which traditional measures of economic valuation like profitability were superseded by metrics of publicity such as brand recognition and “mind share.” Advertising thus became an important dot-com business strategy: necessary not only to acquire customers but also to attract the next round of vital investment capital. The bubble ultimately functioned as an accelerant to surveillance [...] In addition to providing material support for ad spending, the bubble helped to foreclose alternative media funding models. Publishers considering user subscriptions ran into the powerful headwind of “get big fast.” “Our investment bankers were urging us not to charge [for content],” said the cofounder of financial news site TheStreet.com.41 Although start-ups did not need to be profitable to get funded, they were required to sketch out plans for future revenue, particularly in the bubble’s later stages. As Ethan Zuckerman notes, dot-coms were not universally excited about adopting the advertising business model. It just so happened that advertising was the “easiest to market to investors.”42 Advertising became a kind of default business plan for dot-coms who could not risk losing market

• Understanding the Dotcom Bubble: Causes, Impact, and ...

  ## What Was the Dotcom Bubble? The dotcom bubble, also known as the internet bubble, epitomized a period of speculative mania that drove U.S. technology stock valuations sky-high during the late 1990s. Fueled by a fervor for internet-based companies, equity markets experienced exponential growth, highlighted by the Nasdaq index skyrocketing from under 1,000 in 1995 to more than 5,000 by 2000. This speculation relied heavily on the promise of profitability rather than actual earnings, leading to a frenzy where investors overlooked traditional financial fundamentals. [...] ## Exploring the Dotcom Bubble Phenomenon The dotcom bubble, also known as the internet bubble, grew out of a combination of the presence of speculative or fad-based investing, the abundance of venture capital funding for start-ups, and the failure of dotcoms to turn a profit. Investors poured money into internet start-ups during the 1990s, hoping they would one day become profitable. Many investors and venture capitalists abandoned a cautious approach for fear of not being able to cash in on the growing use of the internet. [...] Investopedia / Hilary Allison The dotcom bubble was a period of rapid growth and eventual collapse in the stock prices of internet-based companies during the late 1990s and early 2000s. ### Key Takeaways Get personalized, AI-powered answers built on 27+ years of trusted expertise. ## What Was the Dotcom Bubble?

• The Late 1990s Dot-Com Bubble Implodes in 2000

  The dot-com bubble coincided with the longest period of economic expansion in the United States after World War II. Inflation and unemployment were declining, and economic growth and productivity increased substantially. From October 1998 onwards, markets cheered the seemingly endless IPOs of dot-com firms without paying much attention to the viability of their business models: a financial bubble was inflating. In spite of their huge market capitalizations, most of these internet startups would never generate any revenue or profit.

• Lessons From the Dotcom Bubble | SoFi

  ## FAQ ### What was the dot-com bubble? The dot-com bubble was a period marked by rising tech stocks and tech IPOs in the late 1990s, which eventually led to a bubble burst. Many companies went bankrupt or lost significant value after the burst. ### What caused the dot-com bubble to burst? Some reasons that the dot-com bubble burst include the fact that many companies weren’t profitable despite their lofty valuations, dried-up sources of capital, and fleeing insiders selling shares. ### What are some lessons from the dot-com bubble? Some lessons may include the fact that diversification is important, ignoring investment basics can have negative consequences, and that market bubbles are always possible, so investors should pay close attention. [...] A bubble comprises numerous factors — such as rising stock valuations, an increase in initial public offerings (IPOs), and a focus on buzz over basics — and financial professionals are always on the lookout for the next one. Here are five lessons from the dot-com bubble and the financial crisis that followed. Key Points • Asset bubbles may arise when investors’ extreme enthusiasm overshadows researching company fundamentals. • Diversification of assets may help to shield a portfolio against sharp market downturns. • Momentum trading demands discipline and paying close attention to market movements to avoid prolonged holding. • Historical events may provide insights but not necessarily forecasts — it’s important to view potential investments in context of the current market. [...] • The Dot-com bubble burst during the middle of 2000. ## What Caused the Dot-com Bubble, and Why Did It Burst? Back in the mid-1990s, investors fell in love with all things internet-related. Dot-com and other tech stocks soared. The number of tech IPOs spiked. For example, one company, theGlobe.com Inc., rose 606% in its first day of trading in November 1998. Venture capitalists poured money into tech and internet start-ups. And enthusiastic investors — often drawn by the hype instead of the fundamentals — kept buying shares in companies with significant challenges, trusting they’d make it big later.