This past week’s market plunge elicited comparisons with past crashes, with Thursday’s 10% drop in the Dow Jones Industrial Average being the worst since the epic 22% collapse on Black Monday, Oct. 19, 1987. That obscured the 20th anniversary of another major market event, the peak of the Nasdaq tech bubble on March 10, 2000.
That was supposed a once-in-a-millennium moment of madness, never to be repeated after the bitter lessons of bidding up internet wunderkinds lacking earnings or, in some cases, even much revenues, just “eyeballs” looking at their sites. This past year saw the ascent of the likes of
(ticker: TSLA) and
Virgin Galactic Holdings
(SPCE). At least the electric-auto pioneer wisely took advantage of its stock’s nearly fivefold increase from last May to raise $2 billion in fresh equity near its February peak to shore up its balance sheet and ensure its long-term financial viability.
Some of the biggest names of the class of 2000 no doubt wish they had been equally prescient. With the help of our researcher extraordinaire, Dan Lam, we found that some of the names that loomed large in the Nasdaq-100 index remain, but as mere shadows of their former selves, such as AOL, which merged with Time Warner in what may be the worst deal in corporate history. Yahoo! became Altaba, with stakes in
Alibaba Group Holding
(BABA) and Yahoo Japan (YAHOF), while Yahoo!’s internet assets were sold to
(VZ), which also absorbed the AOL platform. Sun Microsystems was taken over by
(ORCL) in 2010, while EMC was acquired by
(DELL) in 2016.
Other Nasdaq numbers that soared in the bubble never returned to their previous glory, even though they’re still around.
Sirius XM Holdings
(SIRI) had a negative total return of 88.83% in the two decades ended March 10, the worst performance among the Nasdaq-100, according to Bloomberg.
(NTAP) had a negative 57.59% return, followed by
(INCY) with minus 26.88% over the same span. Fourth worst was
(CSCO)—the No. 2 Nasdaq company 20 years ago, in terms of market capitalization, and the blue chip of internet stocks—with a negative 24.09% total return, including dividends.
The top Nasdaq name of 2000,
(MSFT), is now neck and neck with
(AAPL) for the lead market-cap position. Most of its 395.57% two-decade total return was scored in the past few years, after a long period of lackluster performance.
(INTC), the No. 3 Nasdaq stock in 2000, returned a wan 40.15% over the ensuing two decades, while Oracle, No. 4 back then (and now traded on the NYSE), returned 64.93%, with dividends rather than price increases generating most of both stocks’ gains.
The biggest Nasdaq winner from 20 years ago was
(MNST), with a high-energy total return of 74,588%, followed by
(ORLY), with 7,770.4%. The biggest tech winner was
(ANSS), with a 7,381.47% return, followed by Apple, with 7,220.39%.
As Dan sagely observed in compiling these records, many of today’s biggest tech winners either weren’t public in 2000 or didn’t exist.
(GOOGL) was beginning to dominate the internet, but it didn’t have its initial public offering until 2004.
(FB) launched its social media site in 2004 and had its IPO in 2012.
Hubris can be dangerous. Companies on top don’t necessarily stay there, with the new, new thing ready to supplant them, especially in tech. My recollection of the bubble era was a loudmouth on my commuter train bragging that his Sun Microsystems stock had split again, around its peak. “Life is gooood,” he blared on his cellphone. “Sic transit gloria” remains as true as ever.
Write to Randall W. Forsyth at [email protected]