The Dot-Com Bubble
The dot-com bubble is often referred to as the “tech bubble,” “Internet bubble,” or “dot-com boom.” It happened during the late 1990s, during which the use of the internet increased at an exponential rate. The hype created an unsustainable environment in which investors over-priced Internet-related companies. Today, we know that it was all a big mistake, but it could have been avoided if we knew how to avoid it.
How To Know About The Dot-Com Bubble
The dot-com bubble wasn’t completely disastrous, though. Insiders of dot-com companies reaped profits of about $43 billion in the two years following the market’s peak. This represented a 23-fold increase in the number of shares they bought just one month earlier. A decade later, most of the publicly traded dot-coms were gone, and investors have been wary of them ever since.
The dot-com bubble caused hundreds of companies to go public in the nineties and early 2000. Most of them spent hundreds of millions of dollars on marketing and advertising, and investors only considered sales growth and profit. Some companies ended up losing money, while others made meager acquisitions in order to keep their market share. Meanwhile, many did spend a lot of money on lavish facilities, as well as luxury vacations for their employees.
Eventually, the dot-com bubble popped, causing a mild recession and shattering confidence in a new industry. The effects of the dot-com bubble lasted for a decade. Even those companies that were already successful were affected by it. For example, Intel’s stock went from seventy-three dollars a few months before it crashed, to $20-plus. Although Intel’s IPO wasn’t related to the dot-com bubble, its stock price recovered slowly.