Capitulation and survivors
Enron and WorldCom collapsed into accounting scandals. The Nasdaq bottomed at 1,114 in October 2002 — down 78% peak-to-trough. But a subset of the era's companies survived and eventually dominated: Amazon, eBay, Cisco. The bubble produced both the largest losses and the most valuable businesses of the coming decade.
Amazon's stock fell 94% from its 1999 peak to its 2001 low. Its revenue, in the same period, roughly tripled. The disconnection between stock prices and business fundamentals during and after the crash was almost as extreme as the one that caused the crash.
07 · Dot-com Crash
Between 1995 and March 2000, the Nasdaq rose more than fivefold. Any business with a .com in its name could raise money on a spreadsheet. The thesis was real — the internet would reshape the economy — but the valuations were a different thing entirely. Pets.com, Webvan, Kozmo, eToys. When the cash ran out, it ran out everywhere at once.
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