The Dot Com Bubble

The “Dot com bubble” started in about 1995. It was when almost everyone invested in the Internet companies. In year two thousand the bubble broke and the market crashed. I would compare the dot com bubble to the tulip bubble. The tulip bubble was when tulip bulbs cost like million dollars each. If you had a tulip bulb you could retire. Then over night they were suddenly worth nothing. Or if you want to go recent you could go with the pokemon bubble. The holographic charzard card was worth about a hundred bucks. Now you can sell it for a couple bucks.

Pets.com


Pets.com sold dog food and pet accessories. It is really used as the description of the .com bubble. Pets.com it is pretty funny thinking how much money they spent. Since all of the Internet companies were earning so much money pets.com spent somewhere around three hundred million dollars. Pets.com came out in 1998 and was thinking that it would take them about four-five years to just break even. Then of course the bubble broke in year two thousand sending them into bankruptcy.

Why it crashed


Well it crashed because duh. Everyone was selling their stocks. People were probably selling their stocks because for things like pets.com they realized that they were investing so much money in dog food. So they started selling.

Spending to much


One of the reasons why the companies lost so much money and had to close was that they were expanding too fast. Many people thought that expanding their companies was better that making sure that they were earning money before expanding. Like the example above with pets.com they spent three hundred million dollars trying to expand and then the marked crashed. So they were down millions and millions. And sense people were selling there stocks they weren’t earning any money at all. They were just spending gobs and gobs of money.

The aftermath


After the bubble burst tons and tons of Internet companies had to liquidate, other big were bought by other companies. Again I am going to mention pets.com. Pets.com was made an offer to be bought by petsmart. Of course they didn’t offer enough so they turned them down. But that’s an example. The after math made lots and lots of companies go out of business. But some made it through like Amazon and Ebay. Lots of major companies like Google are very worried that there might be another bubble on the horizon.

Why people bought


When the Internet came out people were thinking wow the Internet is going to be really important in peoples lives. And it is okay important. So people bought the stock of companies just because it was an Internet company not because it was a good company that they though would earn a lot of money. That is really what a bubble is. Which is also why it tanked because they realized that they were doing something stupid so they sold.

And that is the dot com bubble.


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