internet bubble - Investment & Finance Definition
The period in the late 1990s that was one of the biggest periods of market euphoria ever seen. Venture capitalists raced to fund Internet companies before their competitors,.When start-up companies had been funded for several years, often no more than three years, venture-capital backers rushed to take them public, with investment bankers fighting for the business. (During normal situations, it would take a start-up company about seven to ten years to develop its business to the point where it was ready to become a public company.)
The Internet boom had its beginning when Netscape Inc. did its initial public offering (IPO) in 1995. The price of Netscape stock soared once trading began. That captured the attention of Wall Street, which previously had not thought of technology companies as a lucrative source of business. As more companies did IPOs, the demand for Internet-company shares shot up and prices spiked. Many people who got in on the ground floor of IPOs became millionaires. The hype soon died down as reality began to seep back into the market and investors began to question whether many of the companies could ever generate earnings that justified their stock prices. The NASDAQ stock market peaked in March 2000, and began its descent into a technology bear market, as well as an overall bear market, which burst the bubble.