If the tech bubble seems like a long time ago, well, it was.
And perhaps no company captures the rise and fall of the bubble-era tech sector more vividly than Yahoo.
On Monday, the company announced it would sell its core business to Verizon for about $4.8 billion, leaving a stake in Chinese e-commerce giant Alibaba the market values at about $30 billion left to be siphoned off into an investment vehicle to be named later.
This sale of its core unit to Verizon is being seen by the market as the effective representation of what the company’s actual business — selling ads on the internet — is worth. Following this news, a number of commentators were quick to bring up that Yahoo was once the darling of the new millennium’s tech future, with its market cap maxing out at over $125 billion. Now, the company would go for about 4% of that.
And while this market-cap history of Yahoo is a factual statement perhaps aimed at showing just how much of a failure the company’s really been after its 22-year life-cycle (and the failures have been many!), the ridiculous peak of the stock’s valuation really just captures how insane the tech bubble was.
Today we hear about bubbles potentially popping up in all corners of the financial market — venture capital, government bonds, junk bonds, stocks, and so on — but no recent or prospective bubble is likely to look as clean on a chart as the ’90s tech bubble.
To my eye, the ascent on Yahoo’s market cap in 1999 almost creates the illusion that time bent backwards for the stock. And this is the true essence of bubbles: they create new, distorted realities that don’t seem subject to the laws of physics.
Then they end.
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