The Dot-Com Bubble: When the Internet Crashed to Earth
A 78% NASDAQ decline that separated visionaries from speculators
"The market can stay irrational longer than you can stay solvent."
— John Maynard Keynes
01The Euphoria
Between 1995 and 2000, the NASDAQ Composite rose from 1,000 to over 5,000. Companies with no revenue, no business model, and names ending in ".com" commanded billion-dollar valuations. Pets.com raised $82.5 million in an IPO and went bankrupt nine months later. Webvan burned through $1.2 billion trying to deliver groceries. The prevailing wisdom was that traditional valuation metrics were obsolete — this was a "new paradigm."
02The Peak
The NASDAQ hit its all-time high of 5,048.62 on March 10, 2000. That same week, Barron's published a cover story titled "Burning Up" that analyzed the cash burn rates of internet companies and predicted most would run out of money within a year. The article was prescient. Within days, the selling began — slowly at first, then all at once.
03The Unraveling
The decline took two and a half years. By October 2002, the NASDAQ had fallen to 1,114 — a 78% decline from its peak. $5 trillion in market value evaporated. Of the hundreds of dot-com companies that had IPO'd during the bubble, the vast majority went bankrupt. Even survivors like Amazon fell 93% from peak to trough, trading at $5.51 in September 2001. Cisco, the most valuable company in the world at the peak, lost 86% of its value and has never recovered its 2000 high.
04Who Survived
The companies that survived the crash shared common traits: real revenue, a path to profitability, and enough cash to weather the storm. Amazon, eBay, and Priceline emerged stronger. Google, which wasn't even public during the bubble, launched its IPO in 2004 and went on to dominate the next era of the internet. The crash didn't kill the internet — it killed the companies that had no business being on the internet.
05The Long Recovery
The NASDAQ didn't reclaim its March 2000 high until April 2015 — fifteen years later. For time-travel investors, the dot-com era is a masterclass in distinguishing between transformative technology and speculative excess. The internet did change everything, just as the bulls predicted. But most of the companies that rode the hype to astronomical valuations were not the ones that ultimately delivered on the promise.
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