What caused the dot-com bubble?
What was the peak of the NASDAQ Composite stock market index during the dot-com bubble?
What was the title of the Barron's article published on March 20, 2000?
What was the reason for the decline in enrollment for computer-related degrees after the dot-com crash?
What was the percentage of dot-com companies that survived through 2004?
What was the impact of the dot-com crash on retail investors?
What was the impact of the dot-com crash on the job market?
What was the total value wiped out by the dot-com crash?
What companies gained market share and came to dominate their respective fields after the dot-com crash?
The dot-com bubble was a stock market bubble in the late 1990s due to the growth in Internet adoption, venture capital, and the rapid growth of valuations in new dot-com startups. The Nasdaq Composite stock market index rose 800% between 1995 and its peak in March 2000, only to fall 740% from its peak by October 2002, giving up all its gains during the bubble. Many online shopping and communication companies failed and shut down during the dot-com crash, while others survived and thrived. The web was a new killer app, bringing together unrelated buyers and sellers in seamless and low-cost ways. Most dot-com companies incurred net operating losses as they spent heavily on advertising and promotions to harness network effects to build market share or mind share as fast as possible. The bubble burst in March 2000, and the Internet continues to grow, driven by commerce, ever greater amounts of online information, knowledge, social networking, and access by mobile devices. Spending on technology was volatile as companies prepared for the Year 2000 problem. Alan Greenspan raised interest rates several times, which were believed by many to have caused the bursting of the dot-com bubble. On Friday March 10, 2000, the NASDAQ Composite stock market index peaked at 5,048.62. On March 20, 2000, Barron's featured a cover article titled "Burning Up; Warning: Internet companies are running out of cash—fast", which predicted the imminent bankruptcy of many Internet companies. By June 2000, dot-com companies were forced to reevaluate their spending on advertising campaigns. On November 9, 2000, Pets.com, a much-hyped company that had backing from Amazon.com, went out of business only nine months after completing its IPO.The Dot-Com Crash Summary
- The dot-com bubble was a speculative period in the late 1990s characterized by the proliferation of internet-based companies.
- In March 2000, the NASDAQ Composite peaked at 5,048.62, but by October 2002, it had lost 78% of its value.
- The September 11 attacks and several accounting scandals and bankruptcies contributed to the dot-com crash.
- After the crash, many dot-com companies went through liquidation, and supporting industries scaled back their operations.
- Several companies and executives were accused or convicted of fraud, and the SEC levied large fines against investment firms for misleading investors.
- Retail investors transitioned their portfolios to more cautious positions, and popular internet forums that focused on high-tech stocks declined in use.
- Layoffs of programmers resulted in a general glut in the job market, and university enrollment for computer-related degrees dropped noticeably.
- As growth in the technology sector stabilized, companies consolidated, and some, such as Amazon.com, eBay, and Google, gained market share and came to dominate their respective fields.
- The most valuable public companies are now generally in the technology sector.
- The dot-com crash wiped out $1.755 trillion in value, and by the end of the stock market downturn of 2002, stocks had lost $5 trillion in market capitalization since the peak.
- The operational mentality of executives and investors completely changed after venture capital was no longer available, and a dot-com company's lifespan was measured by its burn rate.
- 48% of dot-com companies survived through 2004, albeit at lower valuations.
Test your knowledge of the dot-com bubble and its aftermath with our quiz! From the explosive growth of the technology sector to the devastating crash, we'll challenge your understanding of the events that shaped the modern internet age. See if you can answer questions about the factors that led to the bubble, the companies that emerged from the wreckage, and the lasting impact of this pivotal moment in economic history. Whether you lived through the dot-com era or are just learning about it now, our quiz is a fun and
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