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 Question of the Month
 Is the internet sector selloff overdone? (July 2000)
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| Author | Topic: Is the internet sector selloff overdone? (July 2000) |
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InvestorGuide Daily Administrator |
posted 07-31-2000 06:47 PM
 
Cnet provides a chilling account of Furniture.com's struggles: an etailing case study. (source: Cnet) http://news.cnet.com/news/0-1007-201-2295320-0.html |
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InvestorGuide Daily Administrator |
posted 07-21-2000 06:12 PM
DrKoop.com shares soared 55% Friday after MilleniumHealth Communications offered to acquire the e-health Web site. Late in the afternoon Dr. Koop announced it had not entered into any agreement. (source: CNNfn) http://cnnfn.cnn.com/2000/07/21/deals/koop/ |
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InvestorGuide Weekly Administrator |
posted 07-17-2000 06:34 PM
Many internet stocks have fallen 60% or more from their highs. Are they now bargains, or will they fall all the way to zero? (source: eCompany) http://www.ecompany.com/articles/mag/1,1640,6856,00.html Red Herring looks at how the correction in technology equities happened -- and what it means for the future. http://www.herring.com/mag/issue80/mag-new-80.html |
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InvestorGuide Daily Administrator |
posted 07-14-2000 06:18 PM
The Wall Street Journal asks, "Who was behind the internet bubble?" (source: MSNBC) http://www.msnbc.com/news/432814.asp |
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mrcool |
posted 07-11-2000 01:09 PM
greenjeans, I think our positions are pretty similar. But just to make one more clarification, the multiples on a company don't need to keep increasing, or even remain steady, in order for the stock to keep going up. If a startup has a P/E of 200 and then grows earnings 100% that year, if the stock price doesn't change then suddenly the P/E is 100. And so on. So the point is that even investors in these rapid-growth stocks understand that the same growth rate won't continue, and that the multiples will fall, but that doesn't mean the stock prices will fall. Feel free to reply if you disagree or if I'm missing your point. |
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InvestorGuide Weekly Administrator |
posted 07-11-2000 10:46 AM
Internet stocks have been getting pummeled. Are there any bargains to be had? (source: Internet Stock Report) http://www.internetstockreport.com/tracker/article/0,1785,1711_410271,00.html Internet investors have been worrying about the amount of cash in dot-com coffers, but Upside suggests sequential growth is another metric that merits investigation. (source: Upside) http://upside.com/texis/mvm/story?id=39636c710 Layoffs in the digital world fired up in May and June, and there may be more to come. (source: CNNfn) http://cnnfn.com/2000/06/30/career/q_dotcomayoffs/ |
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greenjeans |
posted 07-08-2000 01:40 PM
I guess maybe I was unclear--I agree that there are going to be some great, long-term investments in internet companies and that some are going to make it work. But, I think the extreme multiples we saw when the internet was new and unknown are of the past. The great companies with huge market-caps that are out there now don't trade at the same multiples as when they were newcomers with a hot buzz. Cisco and Siebel are great companies, but I can't expect them to maintain an outrageous growth rate forever. The internet valuations got ahead of themselves, that was all I was really trying to say. At some point you stop being a high-growth company and just start being a great company, and from an investors standpoint, those two things are a little different. And, all that being said. I think there will be new high-growth internet companies, but they will be doing things with the net we haven't seen yet--and so there will be that buzz and mystery that is required for a stock's price to get out of control--but, they'll come back to earth eventually as well. Growing pains for a new technology and a new industry--that is what this is in my mind.
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mrcool |
posted 07-08-2000 12:51 PM
I'm curious as to why you feel that way. Ten years from now, the recent 'crash' will have shrunk to a hiccup on a logarithmic graph. I don't think what has happened in the last couple months should be considered a 'correction', as if things were wrong but now they're right. It's very difficult to calculate the likelihood that a given company will explode, and that's why prices have fluctuated wildly and will continue to do so... but the biggest internet opportunities haven't happened yet. I predict that five years from now, there will be forty internet companies with market caps above $100 billion (sorry, I don't know which ones they'll be). There will also be a huge number of flameouts, but the market cap of the internet sector as a whole will continue to grow quickly.
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greenjeans |
posted 07-08-2000 11:19 AM
My feeling is that all high growth industries need to experience this sort of thing. For some reason, people want to believe that companies can keep growing at the rates they do when they first start up...the law of large numbers just makes that impossible. I don't think we will ever see any internet company (as they are defined now) have the valuations (or multiples is probably a better measure) that many once did. |
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vonharm unregistered |
posted 07-08-2000 06:28 AM
Overdone is equal to burned to a crisp. I believe Internet stocks are so much like homes in Homestead, Fla. before Hurr. Andrew - alot of faith in straw houses and not much thought to the long term. Well, the storm (investors)has blown through and we are seeing who has survived the carnage. The strong internet companies will survive and be rewarded with investor support, the weak will be left sizzling and drift away. |
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scripter |
posted 07-07-2000 05:12 PM
Also note that terrific's list is for YTD drops, not drops from 52-week highs (which would presumably be even worse). Anyway, I think the plunge is a combination of the highs being too high (thanks to lemming mentality) and the selloff not differentiating between the good and the bad companies (again, thanks to the lemming mentality). I'm in the process of researching these bottom dwellers and wouldn't be surprised if I find a few worth investing in. |
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terrific |
posted 07-07-2000 03:18 PM
Good question. Some stocks that fell off the cliff deserved to (either they were overpriced or they've failed to execute and are running out of money). I just stumbled upon a list of the ten internet stocks that have dropped the most. Here it is. Anything worth scooping up? TCTY Talk City -93.9% Content/Communities INSW InsWeb -91.5% E-tailers ESTM E-Stamp -91.4% E-tailers PLRX PlanetRx.com -89.5% E-tailers ROWE Rowecom -88.9% E-Commerce Enablers FSHP FreeShop.com -87.4% Advertising PFSW PFSweb -87.3% E-Commerce Enablers PASA quepasa.com -87.0% Content/Communities EGRT Egreetings -86.2% Internet Services BGST BigStar -86.0% E-tailers |
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Mayor of Investorville Administrator |
posted 07-07-2000 02:14 PM
The Nasdaq is only about 20% off its all-time high, but many individual internet stocks are currently trading for one-fifth of their highs or less, including Drugstore.com, TheStreet.com, NBCI, and eMusic.com. Is this drop warranted, or an overreaction? Are there bargains to be had now? Is the fundamental story of the internet intact? |
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