Triple A Learning IB Blogs

The development of e-commerce has seen some huge peaks and troughs. In its infancy, e-commerce experienced a significant speculative boom lasting from 1995 to 2000, when global stock markets saw their values rocket on the founding of thousands of Internet-based businesses referred to as ‘dot-coms’. On March 10, 2000, the technology dominated NASDAQ Composite index, peaked at 5,048.62, more than double its value just a year before previously. Investors began to doubt the credibility of many of the business models. The financial magazine Barron’s shocked the market with a cover story “Burning Up” which highlighted the fact that America’s 371 publicly traded Internet companies had grown to the point, where they were collectively valued at $1.3 trillion, amounting to about 8% of the entire U.S. stock market, yet many had never made a net profit.

By 2001, the bubble was deflating at full speed and between March 2000 and October 2002, the crash wiped out $5 trillion in the market valuations of technology companies. It is hardly surprising, therefore, that investors have been far more circumspect since that period when valuing internet businesses and wary of putting cash into unproven firms. However, there appears to be foundations of a new high technology bubble developing in two sectors: social networks and online media.

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