What stock was the original catalyst for the dot com crash?

Answer 1

No one company was the catalyst. The house of cards came tumbling down from its own weight.

On March 27, 2000 CSCO hit 82.00 a share and closed at 80.06. This was 4 days following its 2 for 1 stock split. It was all down hill from there. On May 23, 2000 it was selling for 50.25. It never recovered.

On March 24, 2000 INTC hit 145.38 a share and closed at 144.06. On May 24, 2000 it traded at 109.81. It then recovered to a new high of 151.68 on Aug 24, 2000. It was all down hill from there.

On March 24, 2000 NT hit 144.19 a share and closed at 141.25. On May 24, 2000 it traded at 45.75. Today it trades at 2.10.

On March 24, 2000 GLW hit 226.44 and closed at 219.94. On May 24, 2000 it traded at 157.25. Today after a 3 for 1 split it trades at 22.07. It later recovered and hit a new high on Aug 30, 2000 of 340.00. it split shortly thereafter and then collapsed.

So comparing these dot com darlings we can see a pattern. March 24, 2000 was the pivetal day. NT just collapsed. GLW and INTC did manage to rally later and recover lost ground but they too collapsed.

You have to recall that these companies were selling at a PE ratio of 100 or more at the time. It is not surprising that they collapsed. What is surprising is that it took so long.

Answer 2

Early in the bubble years, three major technology groups benefitted most from the building excitement of what the Internet had to offer. These were: Internet and network infrastructure (WorldCom, larger than MCI in August 1996, Internet tools ( Netscape, IPO December 1995), and Internet-direct consumer websites (Yahoo!, IPO April 1996).Over 1999 and early 2000, the Federal Reserve had increased interest rates six times, and the runaway economy was beginning to lose speed. The dot-com bubble burst, numerically, on March 10, 2000, when the technology heavy NASDAQ Composite index peaked at 5048.62 (intraday peak 5132.52), more than double its value just a year before. The NASDAQ fell slightly after that, but this was attributed to correction by most market analysts; the actual reversal and subsequent bear market may have been triggered by the adverse findings of fact in the United States v. Microsoft case which was being heard in federal court. The findings, which declared Microsoft a monopoly, were widely expected in the weeks before their release on April 3.

Answer 3

It was not a single company that caused the dot com crash. Instead, it was many companies that had flawed business model. These companies were selling dreams and investors were buying into them. Companies that had no business going public were going public and taking investor's to the cleaners. The money ran out in late 2000 and the rest is history.

Answer 4

Investors and Institutions were moving stocks up that had no fundamentals for the reason of making money. When the walls came came tumbling down it was the small investor and not the big institution that were left holding the bag.

Something like what is going to happen with the housing market, all because of Greed.

Answer 5

There are too many to list, but certainly you have to look at Cisco (they had that company "worth" over $500 billion for a short time) and Lucent. Funny, those were both hardware. But looking at it from a market cap viewpoint, it's easiest to pick the big ones.

Answer 6

I think my favorite was a story in The Onion:

BLUE GREEN ALGAE GOES PUBLIC
The story mentioned that annual revenue was zero billion dollars.

Gotta love The Onion

Answer 7

enron?