case study
1) Objectives of the case:
To understand and evaluate the dramatic rise and fall of the stock prices of the Web consultants, along with many others in the Internet sector, during the dot come bubble of 2000. It was question that boggled minds, as to how this could have happened in a relatively sophisticated capital market like that of the United States.
To discuss the role of capital market intermediaries in the dot-com of 2000 and to check whether their incentives were properly aligned with their intended roles.
To evaluate why the market allowed the valuations of many Internet companies to go so high, and what was the role of the intermediaries in the process that gave rise to the stock market bubble.
To go through the details regarding the various intermediaries involved in the situation, including Venture Capitalists, Investment bank underwriters, sell-side and buy-side analysts, etc.
To understand the profound role played by information, retail investors and the dot come and internet consulting companies themselves, in taking the stock prices to such momentous heights and such punishing lows.
To brief the blame game scenario and the consequences of the dot com crash that led to such a scenario.
2) Observations of the case:
There was a steady and momentous rise of the stock prices of Internet consulting and dot com companies, which made their debut roughly around 1997.
Stock markets in industrialized nations saw their equity value rise rapidly from growth in the Internet sector and related fields, with the steady commercial growth of the Internet with the advent of the World Wide Web, as exemplified by the first release of the Mosaic web browser in 1993, and continuing through the 1990s.
There was a clear value shift that was taking place from PC focused technologies to those that were based on the global information network. Network based companies such as Microsoft, Cisco, Pets.com, AOL, Netscape, etc., saw huge turnovers and capital
To understand and evaluate the dramatic rise and fall of the stock prices of the Web consultants, along with many others in the Internet sector, during the dot come bubble of 2000. It was question that boggled minds, as to how this could have happened in a relatively sophisticated capital market like that of the United States.
To discuss the role of capital market intermediaries in the dot-com of 2000 and to check whether their incentives were properly aligned with their intended roles.
To evaluate why the market allowed the valuations of many Internet companies to go so high, and what was the role of the intermediaries in the process that gave rise to the stock market bubble.
To go through the details regarding the various intermediaries involved in the situation, including Venture Capitalists, Investment bank underwriters, sell-side and buy-side analysts, etc.
To understand the profound role played by information, retail investors and the dot come and internet consulting companies themselves, in taking the stock prices to such momentous heights and such punishing lows.
To brief the blame game scenario and the consequences of the dot com crash that led to such a scenario.
2) Observations of the case:
There was a steady and momentous rise of the stock prices of Internet consulting and dot com companies, which made their debut roughly around 1997.
Stock markets in industrialized nations saw their equity value rise rapidly from growth in the Internet sector and related fields, with the steady commercial growth of the Internet with the advent of the World Wide Web, as exemplified by the first release of the Mosaic web browser in 1993, and continuing through the 1990s.
There was a clear value shift that was taking place from PC focused technologies to those that were based on the global information network. Network based companies such as Microsoft, Cisco, Pets.com, AOL, Netscape, etc., saw huge turnovers and capital