Introduction to eCommerce Dot Com Bubble Dr Michael

Introduction to e-Commerce Dot Com Bubble Dr. Michael D. Featherstone 1

Dot Com Bubble 1995 -2002 The dot-com bust of 2000 -2002 And then everything changed. Fast-forward to the dot-com crash of 2000 -2002. Venture capital investments started dropping immediately, borrowers defaulted, bond-market froze, and stock market started to tumble first slowly, and then, after September 11, it dropped down very fast, just like the falling comet. Companies started disappearing left and right, and the party quickly came to an end. Prospects disappeared, analysts changed their tune, and internet became a commodity. http: //www. zacks. com/blog/comments. php? cid=8907 2

Dot Com Bubble 1995 -2002 3

Dot Com Bubble 1995 -2002 Roughly between 1995 and 2001, a speculative bubble known as the "dot-com bubble" occurred, during which Western stock markets saw an increase in value from the growth of the Internet sector. Bubbles such as this have occurred through out history: in the 1840 s, for example, manic buying in the field of railway building lead to a stock market bubble which burst devastatingly in the 1850 s. When the dot-com bubble burst in 2001, the result was a mild but long-lasting recession in the Western world. NASDAQ STOCK LISTING National Association of Securities Dealers Automated Quotations Many technology firms are listed on NASDAQ http: //www. domainmonster. com/editorials/dot_com_bubble/ Because of the unknown and innovative nature of online business, many standard business models were abandoned in the early 90 s in favour of radical new models which focused on brand-building and networking before profits were even considered. The idea was to increase market share whilst operating at a loss. The novelty value of these companies, and the difficulty in valuing them properly, led to an incredible exuberance with which stocks in the new dot-com companies were purchased. This in turn led to them being increasingly over-valued, perpetuating the enthusiasm for buying stocks. The bursting of the dot-com bubble occurred, numerically, on 10 th March 2000; the NASDAQ fell slightly after this peak, but this was attributed to correction by most market analysts. Reprinted with permission from the author 4

Bubble impact on Stock Valuations 5

Consistent Growth of the Web Note that this chart shows growth in EXPONENTIAL TERMS. 6

Growth of e-Business (Sales) 7

Dot Com Bubble 1995 -2002 8

Evolution of the Web Early Period – Academic/Government Research Public Awareness – AOL Primacy E-Commerce/ E-Business Phase Ascendance of Search Advertising/Google/Entrepreneurial Phase Web 2. 0 Ascendance of Social Media 9

This Concludes Today’s Presentation Thank you for your attention 10