Dot-Com Bubble

In March of 2000, everything started to change. In less than a month, nearly a trillion dollars worth of stock value had completely evaporated, and it was predicted that a lot of companies were losing between $10 and $30 million a quarter — a rate that is obviously unsustainable, and was going to end with a lot of dead sites and lost investments. Companies started folding, and magazines took to the streets advising investors on how to limit their exposure to the tech sector, sensing that people were going to start taking a beating if their portfolios were too tied to e-tailers and other companies that were dropping like flies. With this, the dotcom bubble finally popped as scared investors pulled out leaving dotcom companies with no loan money, and no profit to support their companies. During the 2000 Super Bowl, 17 dotcom companies had paid $44 million for ad spots. At the 2001 Super Bowl, just one year after, only three dotcom companies ran ads during the game.
         As most of us know, the internet is an essential part of most of our everyday lives. In fact, all of you are using the internet to access this blog right now. The internet was not always as popular and accessible, and in the mid 90’s only 2.3 percent of the population was actually using the internet because of how non-user friendly the devices tended to be. This all changed though with the creation of mosaic which was a user friendly home internet browser that showed pictures alongside text and was more intuitive to use. This soon led to web traffic increasing by 1000 percent as people started to explore the internet, alongside investors who found this new form of the internet as an amazing way to make some money. With this new investor craze online retailers started to skyrocket getting big investors and gaining a place in American consumer culture.
          With the investment and excitement, stock values grew. The value of the NASDAQ, home to many of the biggest tech stocks, grew from around 1,000 points in 1995 to more than 5,000 in 2000. Companies were going to market with IPOs and fetching huge prices, with stocks sometimes doubling on the first day. It is important to note that at this point none of these companies were actually turning a profit, and were only able to survive off the loans given by venture capitalists. This created a dangerous cycle, because it started to become more profitable to be selling at a loss then selling at a gain. Though this is confusing at first, the more that the companies spent, the bigger they seemed to be leading more investors to keep on throwing money at these monoliths that were really not making any gains.Founder of one of these dotcom websites called Cheap Tickets specifically said, “We need to make money. It hurts our valuation.” Though the dotcom bubble seemed to be an era of economic boom and technological advancement, it would all come down when investors finally realized that none of these companies actually seemed to be turning a profit.

Sources:
https://ideas.ted.com/an-eye-opening-look-at-the-dot-com-bubble-of-2000-and-how-it-shapes-our-lives-today/
https://time.com/3741681/2000-dotcom-stock-bust/