Internet Stocks Plunge As Only The Dow Rises

Bloodbath comes to mind as the Internet and technology sectors drop today with ISDEX plunging 11% to 418.73. Let’s see how far it’s fallen. April 13 ISDEX hit its 696.76 high. So this bellwether indicates that Internet stocks are down 40% as a group from their highs in two months. I believe we could see some more weakness before any widespread buying occurs. But value in my mind starts to emerge in some of these stocks.

Right now, however, too many negative elements lining up keep pushing the sector down: 1) interest rate fears 2) soft summer (that’s traditional) and 3) more IPOs than investors know what to do with.

We’ll let summer shake the good from bad fruit and see which are standing in August/September/October. For on the other side of the equation depressed values make some of these firms more attractive as acquisition candidates. It also brings out the fact that mergers may form a stronger business and may no longer be a luxury but a necessity for long-term value creation for Internet firms trying to go after a wide consumer or corporate base. Girth matters now.