Internet Bubble

See: Bubble.

The glory days of the early internet 1.0 revolution. Crazy things were funded by dreamy-eyed Venture Capitalists.

"Everything" traded at 100 times revenues or higher. The space grew super fast...but the fundamentals of the profit-making potential of the businesses didn't warrant the extremely high stock prices.

Bubbles are thin and fragile and, when they burst, you get soap in your eyes. And that's what happened in March 2000. Things recovered a few years later and higher highs were achieved. And the beat goes on.com.

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Finance: What is a Bubble?5 Views

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Finance allah shmoop what is ah bubble All right well

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this is a bubble See what happened there got bigger

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and bigger and bigger And then it popped and here's

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the stock market from about nineteen Ninety two until about

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two thousand It got bigger and bigger and bigger And

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then it popped And yet was a bubble not just

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a big fat bull market It was a crazy ludicrous

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tulip mania Kind of time like start ups with almost

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no revenues trading and billions of dollars Yep And tulip

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mania That was a really thing One tulip sold for

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forty grand go figure wasn't like if you ate it

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you lived forever So yeah it was a bubble So

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what caused the ninety nine bubble Well greed and it

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wasn't good At least for some The internet had come

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along It was a new thing consumers by the millions

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could download in the privacy of their homes Art films

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Yeah That's what we'll call them art films by the

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terabyte money was flowing from silicon valley investors into startups

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at record pace hoping to take advantage of this new

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amazing internet thing and the valuations of companies got higher

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And higher and higher Nasdaq went up some four hundred

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percent in just half a dozen years and the blessed

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cos traded at one hundred times trailing revenue not earnings

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but revenue So if you think about the idea that

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if you invest a dollar and you want to get

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more than that back and that dollar comes from profits

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of companies than one hundred times revenues cos we're probably

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something like five hundred times earnings or more So for

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one hundred dollars oven investment you've got like a dollar

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of revenues in twenty cents of potential earnings Like maybe

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a a decade later maybe yeah that's a bubble and

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it burst At least you don't have that danger with

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actual tulips or bitcoins Yeah they take bitcoins when you

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buy tulips Would be kind of a good marriage there

Find other enlightening terms in Shmoop Finance Genius Bar(f)