The World Wide Web Bubble Research Paper Example | Topics and Well Written Essays - 2500 words

The World Wide Web Bubble - Research Paper Example The essay "The World Wide Web Bubble" describes the reasons and consequences of one of the speculative bubbles, which took place within the time period of 1997 to 2000. The venture capitalists found record-setting growth in the internet sector as the dot-com companies were experiencing a meteoric rise in the stock prices and as a result, moving faster with reduced caution than usual. These companies chose to mitigate the risk by the start-up of many contenders and left it up to the market to decide that which would turn out to be successful. The low rate of interest within the period of 1998-99 has helped in increasing the total startup capital amount. Some of these dot-com companies had their business model built in such manner which relied mostly on harnessing their network effects by means of conducting operations at a sustainable net loss for the purpose of building the market share. These companies provided their services or their end products to the customers without any costs. They did this with expectation of building enough brand awareness that would help them to charge profitable rates in future. In the financial market, the stock market bubble means a self-perpetuating increase or downfall in the share prices of the stocks of any industry. The bubble occurs in the financial market when the speculators find that there is a rapid increase in the stock value and they plan to buy the stock with the perception that it would rise in future as well rather than because of the fact that these shares are undervalued. Because of this fact many companies were becoming overvalued (grossly). It is due to this reason that when bubble bursts and the share prices come down drastically, many companies