Companies That Had Their IPO in 1998: The Inflating Dot Com Bubble

1998 saw a surge in technology firms going public, often achieving soaring valuations despite limited revenues or profits, driven by widespread speculation about the future potential of the online sector. The market atmosphere was underlined by a flurry of IPOs, substantial investor optimism, and significant first-day stock gains. The climate was one of high stakes, with the burgeoning internet economy at its center, setting the groundwork for the eventual market correction when the dot-com bubble burst in the early 2000s.

• High investor optimism: The market sentiment in 1998 was predominantly bullish, especially concerning tech and internet stocks.

• Tech and internet listings: The IPO Market in 1998 was dominated by technology and internet firms going public, driven by the ever-growing interest in the sector.

• Unhealthy valuations: The market's tolerance for high-growth but non-profitable business models was markedly high, with venture capitalists and investors betting on future profitability driven by rapid market expansion and customer acquisition.

• Significant first-day gains: Many IPOs during the year experienced dramatic first-day gains, a phenomenon that would become emblematic of the late 90s IPO landscape during the dot com bubble.

The market sentiment during 1998 was predominantly positive, buoyed by a strong U.S. economy and the interest in tech and internet companies. This enthusiasm was mirrored in the IPO landscape, characterized by a surge in companies going public, especially in the technology sector, where there was a rush to invest in anything internet-related. Investors were highly optimistic, often driving valuations to soaring heights despite the lack of profitability in many of the firms debuting on the stock market. The IPO scene was vibrant, with numerous companies capitalizing on the favorable market conditions to go public, often at astonishing valuations. The market's appetite for IPOs, particularly tech ones, was insatiable, with investors eager to back the next big tech success story, leading to inflated prices and speculative investment behaviors.

However, the year was not without its challenges. The Asian Financial Crisis, although primarily impacting Asian markets, sent ripples through the global economy, introducing volatility and uncertainty. Despite this, the U.S. markets largely maintained their upward trajectory, helped in part by a shift of capital towards the relatively stable U.S. economy and its booming tech sector.

The dominance of tech and internet companies during the 1998 IPO was emblematic of the dot com years. This era was marked by heightened investor enthusiasm for internet startups and tech firms, driven by the dot-com boom—a period of rapid growth in the use and commercialization of the internet. Numerous tech companies, leveraging the expanding reach of the internet and advancements in technology, went public to capitalize on the bullish market sentiment, attracting substantial investment. These companies spanned various segments, including software, hardware, e-commerce, and other internet services, and would continue to garner large investor interest in the following years. But as we know now, far from all companies that faced early success during 1998 would go on to prosper over the long term.

While tech and internet companies dominated the IPO market in 1998 at large, there were still numerous companies outside of the technology sector that went public. Some notable examples are the Petroleum company Conoco (now part of ConocoPhillips following a merger in 2002), Columbia Sportswear, and Whole Foods (now owned by Amazon).

Many of the tech firms that went public quickly saw their valuation surge to extraordinarily high figures, often despite lacking profitable business models or clear paths to profitability. The high valuations were frequently based on future growth expectations, user acquisition metrics, and the potential for market disruption. But it's also important to keep the atmosphere and general market sentiment at the time in mind. The internet was new, and while powerful and filled with potential, far from everyone at the time had a good understanding of it. In a race to get in on the action and through a fear of missing out on the potential gains that the internet was projected to enable, for many investors and executives the most important thing was to quickly scale and acquire customers before someone else did. However, as time would tell, this was far from being sustainable over the long term.

As was common for IPOs during both 1999 and 2000 as well, many companies that went public during 1998 saw remarkable first-day gains. It was nothing out of the ordinary to see internet and tech companies double or triple the price of their shares during the first day of trading, a phenomenon that oftentimes was the result of underpriced offering prices compared to market expectations, as well as investors rushing to get a piece of the action.

One of the most spectacular examples of this was the IPO of the now-defunct internet company theglobe.com which went public in 1998. During its first day on the public markets, the company saw its shares surge over 600% from the opening bell to the market closing. Like many companies of its kind during these years, it saw early success but failed to find its stride in the long term.

While Arm Holdings was one of the most talked about IPOs in 2023, it wasn't the first time the company went public. Arm had its first IPO in 1998, before being bought by SoftBank in 2016. After NVIDIA tried and failed to buy the company due to regulatory issues, it went public again in the fall of 2023.

Further reading: Arm's Smartphone Monopoly: Setting the Stage for Its IPO

The IT services and consulting group Cognizant went public after a series of corporate restructurings. It had initially been a part of Dun & Bradstreet but went public as a standalone entity in 1998.

Broadcast.com was an internet radio station that was eventually bought by Yahoo for over $5 billion. It is no longer in operation.

While BlackBerry in recent years has shifted away from its roots in phones, pagers, and other hardware, its IPO in 1998 came as the company’s products were starting to gain widespread consumer and institutional adoption.

The American fabless semiconductor manufacturer Broadcom took to the markets in 1998. After merging with Avago, it now operates as Broadcom Inc.

Verisign manages the authoritative domain name registries for the .com, .net, and several other top-level domains, along with a number of other operational segments.

In hindsight, 1998 was a year filled with optimism and extremely bullish conditions for the global markets with tech and internet companies scrambling to go public. Much of what transpired throughout the year was emblematic of the dot com era, and ultimately set the stage for the dramatic crash that would follow the deflation of the bubble.