Dot.Com

Paper Summary:

This paper argues that the dot.com crash was mostly caused by overvaluation of stock prices and poor oversight by venture capital firms who were too eager to throw money at start-up companies that had the dot-com in their name.

Outline:

A. Price to Earnings Ratios out of adjustment
B. Broadcast.com as an example of nothing for something.
C. Venture Capital Firms 50 million dollar rule.
D. Venture Capital Firm Partners afraid to not invest.
E. Venture capital firms hunger for money spread oversight of newly funded companies very thin.

From the Paper:

"Years before the dot-com crash, investment professionals noted that many Internet stocks had P/E ratios in the 30s. Most of the companies behind these highflying stocks had negative or zero earnings. (Perkins 200) A stock analysis statistic in which the current price of a stock (today's last sale price) is divided by the reported actual (or sometimes projected, which would be forecast) earnings per share of the issuing firm; it is also called the "multiple." (Buckman 2001) Market determined P/E ratios include not only earnings and sales growth but also the risk and volatility of the company's performance, the debt-equity structure and other factors. (Buckman 2000)"

More papers on Dot.Com:

• Analytical Essay # 118867 : "Dot.com Dot.Gone"
• Article Review # 94740 : "Dot-Com Era"
• Essay # 55082 : "The Dot.Com Years"

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