Bubble Company

As opposed to a company that manufacturers bubble bath soap, a bubble company is one that is greatly overvalued in the stock market compared to its valuation and financial health.

Investors continuously buy up the stock until the bubble eventually bursts and the stock tanks. Kind of like being built on a house of cards.

There are numerous examples from the 1990s dotcom bubble, such as theGlobe.com, which closed up 606% from its starting price when it went public. Three years later, the bubble burst and the price fell from $97 a share to 10 cents.

Sometimes companies are initially labeled as a bubble company, and then surprise everyone by becoming very profitable. Does Google or Netflix or Facebook or Adobe sound Bubbilicious? Probably not.