For many companies in the web and tech industries, 2013 has been a stellar year. Share prices of firms like Facebook and Netflix have nearly doubled since January, and the Twitter IPO generated much more revenue than expected. While some analysts and investors are eager to see what 2014 has in store for the market, they cannot completely forget about the feelings they had 15 years ago during the 1999 Internet bubble.
Those deeply involved in the industry say that the comparison between today's companies and the "dot coms" of the late 1990s are unwarranted. Unlike the lion's share of the early tech firms, current web companies actually make money and don't base their value on non-financial metrics like the number of visitors.
In addition, the way people use the internet has changed dramatically since 1999. Back then, one could only access a website through a dial-up connection on a desktop computer, but now mobile devices and fast broadband networks are the norm. There is also the matter of web-based advertising, according to Jeff Dachis, co-founder of online ad firm Razorfish. He told Reuters that while early web companies didn't understand how to harness that revenue stream, firms today have turned web ads into a viable business.
"What you had then was 100 times the volume of stock with little to none of the credibility or weight in the marketplace that a Facebook or a Twitter has today,'' Dachis told the news outlet. "Nobody denies now the growth of online advertising or digital marketing.''
Market experts do warn investors, however, to continue to be wary of potential IPOs of apps and websites that have multi-billion dollar valuations, but have no source of revenue and are currently in the red.
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Categories: Stock News