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Back in 1990s, the mania around the dotcom businesses had gripped the globe. The mania was so extreme that between 1995 and 2000, the tech-heavy Nasdaq Composite index rose by an astounding 400%.
The index’s price to earnings (PE) ratio soared to an unbelievable 200 – a number that dwarfed the PE Ratio of 80 for the Japanese benchmark Nikkei 225 during the Japan’s asset price bubble of 1991. This would mean that, at its peak, the investors in the NASDAQ composite index would be paying 200 cents for every cent earned in NASDAQ Composite’s component companies. In 1999 alone, share prices of Qualcomm rose in value by an unbelievable 2,619%.
Also Read: Three strategies to sail through bubble-like scenario in global stock markets
The trigger point of the mania was the release of Mosaic way back in 1993 and subsequent web browsers during the following years. The non-stop releases gave computer users access to the World Wide Web – a trend that popularised the use of the Internet.
However, all this fell flat in 2000s. At the beginning of the year, Alan Greenspan, the then Chairperson of the Federal Reserve, raised interest rates multiple times – a move that was believed to have caused the bursting of the dotcom bubble. In mid-March that year, the news that Japan had again entered recession led to a global sell-off in equities, which disproportionately affected technology stocks.
But the companies that survived the hit of 2000, came out stronger. With more and more innovations on the digital front after 2010, these companies started to come in their own groove. As on date, many of these dotcom companies – those generating most of their business through internet – are worth more than US$1 trillion.
These companies are seeing an unprecedented surge in their revenues as well. Here are the top five dotcoms in terms of revenue:
Amazon Inc (NASDAQ:AMZN): Jeff Bezos, who is now the world’s richest man, founded this company at the start of the dotcom bubble in July 1994 as an online bookshop. The company, after muted growth for the first two decades of its formation, has seen itself grow at an unimaginable pace in the recent years.
In 2020, Amazon reported a whopping US$386.06 billion in revenue. The company has shown a compounded annual growth rate of 29.80% in the topline between 2016 and 2020 – a period of four years, that otherwise witnessed muted earnings in the broader market.
Alphabet Inc. (NASDAQ:GOOG): This is the parent company of search engine Google – a household name by now. Google, just like mobile phones, of late, has emerged as a necessity in the growing age of internet. The company reported US$182.53 billion in its net revenue during 2020. During the four-year period of 2016-20, the company has seen its topline more than double with an annual CAGR of 19.24%.
JD.com: This Beijing-headquartered dotcom was founded a year before the dotcom collapse – in 1998. Net revenue for the full year of 2020 stood at RMB745.8 billion (US$114.3 billion), an increase of 29.3% over the full year of 2019.
Facebook Inc. (NASDAQ:FB): The California-headquartered tech giant is the youngest in the group. It was founded by billionaire Mark Zuckerberg, along with his fellow roommates and students at Harvard College – Eduardo Saverin, Andrew McCollum, Dustin Moskovitz and Chris Hughes. The revenue of the company stood at US$85.97 billion in 2020.
Tencent Holdings Ltd.: Founded in 1998, it is a Chinese multinational technology conglomerate holding company. The revenue of company stood at US$74.31 billion in 2020.
