If you liked Internet-related stocks a few weeks ago, you ought to love them now.
Many Net stocks have been sliding with the market overall in recent days, and Wednesday the selling got serious.
Internet search vehicle Yahoo Inc. tumbled $9.69 to $173.56 on Nasdaq on Wednesday, leaving it down 16% from its recent high.
And that's been one of the minor casualties. Net bookseller Amazon.com sank $11.13 to $107.81 and now is down 27% from its recent peak.
Lycos Inc., a search vehicle that competes with Yahoo, plunged $8.56 to $51.69. It now is priced 52% below its peak of $107.25 reached during a buying frenzy July 6.
Some analysts say that while several Net companies recently reported second-quarter losses that were smaller than expected--boosting investors' optimism that profitability for many of the companies will arrive sooner rather than later--reality is setting in regarding the extraordinarily high valuations of the stocks.
"You've seen a tremendous run, and people are now saying, 'What's going to push it up further?' " said Prudential Securities analyst Paul Merenbloom. "Earnings were in line, but not what people were hoping for."
Is this the end of the mania? Perhaps temporarily. But on Wall Street, as on Main Street, the Internet is something of an ongoing mania--because it has become a tool, a venue, a marketplace and more to an ever-increasing number of businesses and consumers worldwide.
The Net isn't going away, and someday some companies undoubtedly will make a lot of money off the Net. For now, investors seem to be questioning the sanity of paying sky-high prices for stocks that have yet to demonstrate that they will be long-term players in this business.
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The Net Gets Cheaper
Internet-related stocks have been tumbling over the last two weeks, and many now are 20% or more below their recent peaks. A sampling:
1998 Wed. Decline Stock high close from high Yahoo $207.50 $173.56 -- 16% MindSpring Enterprises 52.31 40.31 -- 23 EarthLink Network 46.25 35.50 -- 23 America Online 140.50 107.75 -- 23 Broadcast.com 74.00 57.00 -- 23 Amazon.com 147.00 107.81 -- 27 Excite 55.50 35.88 -- 35 Infoseek 45.00 23.94 -- 47 NetGravity 32.50 17.06 -- 48 Lycos 107.25 51.69 -- 52 S&P 500 index 1,186.75 1,125.21 -- 5 Internet index* 427.39 377.96 -- 12
*Inter@active Week index of 50 Net-related stocks
Source: Times research