Austin Page APUSH 6 June 8, 2015 What was the primary cause of the tech bubble from 1995 to 1999 and the reason for its crash in early 2000? The tech bubble, as it is now known, was a time of widespread speculation in the new Internet industry, spanning from January 1995 to March 2000. This was specifically illustrated by the massive rise in share prices for almost every “dotcom” company - even the NASDAQ composite index rose over 600% during this time period. As share prices continued to rise, more and more people decided to capitalize on this opportunity, fueling the rise even further. The primary cause of the tech bubble was the invention of the Internet and its rapid increase in popularity, and the reason for its crash was the fact that …show more content…
Just one day later, technology shares began to plummet as the dotcom bubble inevitably burst. One of the most direct and obvious reasons for this crash was the ending of the antitrust case against Microsoft, which was declared a monopoly in early April of 2000. The day after the official findings of the Microsoft investigation were made public, April 4, 2000, the Nasdaq experienced a large gap down, but subsequently bounced back up. This did not mark a recovery; the Nasdaq entered into a massive downfall when investors began to realize that many of the loss-making new tech companies were indeed that: loss-making companies. Within a year after the start of the deflation, most of the venture capital backed technology companies had burned through all of their funding and many went bankrupt. Some investors started referring to the original dot-com companies as “dot-bombs,” as they managed to destroy billions of dollars of market value in just a few …show more content…
The cause unsurprisingly does not seem to come down to one single factor. The media definitely played a large part in making investors over confident during the growth and then overly pessimistic leading to its eventual demise. However, I also found that an unsound business model of the time, “Get Big Fast”, played a major role too. I found evidence that more prudent business model based on modest profits had lead to the technology sector recovering. As always, history has a habit of repeating itself, and I also looked into the believe of some that lessons have not been learnt by Social Media companies and that we may be in another Social Media bubble right now with characteristics very similar to that of the dot-com