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Dotcom Bubble

The dotcom bubble refers to the rapid rise and subsequent collapse of technology stock prices in the late 1990s and early 2000s. This period saw massive investments in internet-based companies (dotcoms), leading to overinflated stock prices that were disconnected from the actual profitability of the businesses. Many of these companies had weak business models and failed to generate sustainable revenue, yet investors continued pouring money into them, expecting substantial future profits. The bubble burst in 2000, causing a sharp decline in stock prices and wiping out billions of dollars in market value.

Example

The collapse of Pets.com is a well-known example of a dotcom company that failed when the bubble burst, despite initial investor enthusiasm.

Key points

• Refers to the late 1990s-early 2000s tech stock boom and bust.

• Fueled by speculation and unrealistic growth expectations for internet companies.

• Resulted in significant market losses and bankruptcies.

Quick Answers to Curious Questions

The dotcom bubble was driven by speculative investments in internet companies, often with unproven business models and unrealistic profit expectations.

Many tech stocks collapsed, leading to massive losses, bankruptcies, and the downfall of numerous internet companies.

The bubble’s collapse wiped out billions in market value and significantly impacted investor confidence in tech stocks.