Despite an ongoing pandemic and the U.S. economy barely limping along, the Nasdaq is still trading more than 50% above its March lows. The surge in tech stocks in 2020 has understandably led investors to draw comparisons to the dot-com bubble in 2000.
The Nasdaq ultimately peaked at 5,048.62 on March 10, 2000. Of course, some dot-com bubble stocks have performed much better than others in the 20 years since the bubble burst.
Oracle’s Past 20 Years: Without a doubt, cloud services stock Oracle Corporation ORCL had major difficulty returning to its dot-com bubble levels.
Oracle went public back in 1986, about 15 years before the dot-com bubble peak. In the 1980s, Oracle’s business flourished thanks to co-founder Larry Ellison and the company’s database programs that helped bridge the gap between legacy mainframe computers and the booming PC industry. Oracle IPO investors likely never could have foreseen the rise of the internet, smartphones, cloud computing and many of the other tailwinds that have driven Oracle’s business in the past 20 years.
However, in 1990, Oracle narrowly avoided bankruptcy after the company reported huge losses, laid off nearly half of its workforce and issued corrections to financial filings that had overstated revenues.
Dot-Com Bubble Fallout: Oracle’s high watermark of the dot-com bubble was a split-adjusted $40.10 back in 2000. In March 2000, Oracle’s market cap stood at $245 billion. When the bubble burst, Oracle shares tanked, dropping 59.8% in the year following the Nasdaq top compared to a 59.3% overall decline for the index. Unfortunately, Oracle shares continued to struggle for several more years.
Oracle’s share price hit $6.26 in early 2002 before rebounding to a pre-financial crisis high of $20.38 in late 2008. During the sell-off in 2009, Oracle shares dropped as low as $11.91. By late 2009, Oracle made it back above $20. In early 2011, Oracle pushed through the $30 level for the first time since 2001.
Oracle eventually made it back to its dot-com bubble peak in late 2014, a round-trip journey that took roughly 14 years. In the six years since, the bullish momentum has carried Oracle shares as high as $62.60 this year.
Oracle will forever be known as one of the quintessential dot-com bubble stocks given its market cap exceeded a quarter of a trillion dollars. The good news for Oracle investors who bought at the height of the bubble is that the stock eventually helped investors turn a profit overall over the past two decades.
In fact, $1,000 invested in Oracle stock at the dot-com bubble peak would be worth about $1,703 today, assuming reinvested dividends.
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