Let’s pretend you missed out on the astounding Internet stock run-up that extended from 1998 through last March, as well as the subsequent crash that made 2000 the worst year ever for the Nasdaq.
Rather, you were a latecomer to the game, placing bets only at the beginning of this year. Given the carnage that has visited ‘Net stocks in the past two trading days alone, you probably wish you had stayed safely on the sidelines, right?
Not necessarily. If you had purchased $1,000 of shares in virtual private network vendor V-One on New Year’s Eve, that investment today would be worth $4,800. If you had dropped $1,000 back then on access provider Log On America, you could cash out today for $4,792. Then there’s E-Loan: a $1,000 invested in the online loan processor at year’s end could be sold (theoretically) for $4,180.
Of course, you would buy shares of these companies only if you dabbled in penny stocks, for all three were trading well below $1 per share as 2000 drew to a close. Even with its nearly fivefold increase, LOAX is still under $2, and EELN is barely above that. Here’s a list of the top five Internet stock gainers so far this year:
Dec. 29 Feb. 20 Pct. Current Price Price Gain Mkt. Cap VONE V-One 0.63 3.00 380% $66.4M LOAX Log On America 0.31 1.50 379% $13.2M EELN E-Loan 0.50 2.09 319% $111.5M ADBL Audible 0.44 1.63 270% $44.8M BYND Beyond.com 0.16 0.53 240% $21.6M
The fact is that most investors wouldn’t look twice at any of these companies, since most are on life support and not likely to be around to play this game a year from now.
But a number of larger Internet companies have registered strong (if not triple-digit) gains in the early weeks of 2001. Restricting ourselves to players with market capitalizations of at least $1 billion, here are the leaders:
Dec. 29 Feb. 20 Pct. Current Price Price Gain Mkt. Cap SBYN SeeBeyond 10.25 19.75 93% $1.4B ELNK EarthLink 5.03 9.13 81% $1.9B HOMS Homestore.com 20.13 34.00 69% $2.8B MONE MatrixOne 18.19 27.50 51% $1.2B CKCM Click Commerce 20.88 28.63 37% $1.1B EBAY eBay 33.00 44.56 35% $11.9B SONS Sonus Networks 25.25 33.56 33% $6.2B AOL AOL Time Warner 34.80 44.95 29% $194.5B PRSF Portal Software 7.84 9.94 27% $1.7B TRLY Terra Lycos 10.56 13.31 26% $6.8B
When compared to the astronomical gains posted by companies in the first chart, the performances of the large-cappers listed above may not be eye-popping. But in the long run, where would you rather have your money?