The Making of a Market Bubble
By LAURA M. HOLSON and SAUL HANSELL
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Issue in Depth
The New York Times: Your Money
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April 23, 2000
nytimes.com
[first 3/4 of story omitted]..............
Not to Mention Day Traders
If any one group played the most public role in fueling the Web frenzy, it was day traders and other online investors, many of them congregating in Internet chat rooms like Silicon Investor and Raging Bull. They could sometimes inflate and burst bubbles in a single day.
A little after midnight on March 26, 1999, someone posted a message on Silicon Investor wanting to know if Autobytel.com shares would begin trading later that day. They would -- offered at $23 a share -- and by noon, posters were speculating about how high the price would soar.
"All indications are it will open between 40 and 50," wrote "Scott H."
"They wouldn't start over lunch would they?" added "William Griffin."
"Looking 60-65 opening in next 10-20 mins," wrote "SteveG" at 12:50 p.m.
"WOW," Scott H. responded. "Steve, do you think it will take off after the open?"
In a word, yes. Autobytel.com opened at $52.75 a share, hit a high of $58 and then closed for the day at $40.25.
"nnnnnnnnnooooooooooooooo wwwwaaaaayyyyyyyyyy!! Close around 39-40!! OOUUCCHHH!!!!!!!!!!" wrote "Opey."
"Got to feel the pain for the buyers at $58," replied "Panita." "They will not sleep well tonight."
Since then, the stock has plummeted, closing Thursday at $6.03, down 90 percent from its high.
And in the chat rooms? "IS THIS ONE GOING ANYWHERE?" read one message posted last month.
Chief executives of the Class of March '99 say they find these investors to be distasteful. Ms. Carpenter said iVillage now has a corporate policy of not answering questions from day traders and people in chat rooms. Still, when shares in iVillage and About.com were enjoying positive momentum last fall, both companies rushed to raise more cash in secondary offerings.
Were they taking advantage of the moment? Ms. Carpenter said iVillage recognized that the business-to-consumer Internet story "was going out of favor."
"We always wanted to have cash on hand for a nice long time," she said -- enough cash, she hopes, to last through what may be a long summer of investor discontent |
