Companies That Had Their IPO in 1999: Dot Com Speculation Continues

The IPO frenzy of 1999 was a clear symptom of the broader tech bubble, with a high volume of IPOs and astronomical valuations reflecting a period of extreme optimism and speculative investment in the technology sector. While it created opportunities for short-term gains, it also set the stage for the subsequent market correction when the bubble began to burst in 2000.

• High volume of IPOs: The year saw over 450 companies going public in the US markets, with technology and internet-related companies dominating the scene. This influx was driven by the dot-com boom, where the potential of the internet led to sky-high valuations.

• Speculative investment climate: The market was characterized by speculative investments, with investors eager to back any company that had “.com” in its name. This speculative frenzy was underpinned by a fear of missing out on “the digital gold rush”, leading to inflated valuations.

• First-day gains: Many IPOs experienced extraordinary first-day gains, with stock prices often doubling or tripling from their offering price.

• Focus on growth over profitability: The year was marked by a prioritization of growth, potential, and market share over profitability. Companies were often valued based on pure hypotheticals, and in many cases, wishful thinking.

The IPO market in 1999 was frantic, and as previously mentioned, well over 400 companies went public in the U.S. alone. The atmosphere of the time was one where the narrative and the story behind a company became as important, if not more so, than its financial metrics. Startups with compelling visions of the future, even without solid business models, found eager investors. The willingness to invest in these types of companies in turn led to leadership in internet businesses racing to go public to capitalize on the market sentiment at the time.

However, this exuberance also led to a market environment ripe with speculation and, in many cases, a disregard for fundamental investment principles. Many of the IPOs during this period were for companies that had never turned a profit and, in many instances, had scant revenues. The rush to invest in anything tech-related led to inflated valuations that were not sustainable in the long term. The idea that the internet would revolutionize every aspect of the economy led to inflated stock prices, with investors betting big on the future of e-commerce, online services, and everything in between.

Following a trend that had been prevalent throughout the dot com bubble, it was not uncommon for companies to see the price of their shares double or triple, and in several cases rise much more than that during the first day of trading. The most striking example of this is the IPO of Foundry Networks (now part of Broadcom), which saw its stock close at $156, a 525% gain from the offer price of $25.

The approach the market in general had towards valuations and IPOs in 1999 led to a detachment from traditional investment fundamentals. The market's infatuation with potential over profitability meant that as long as a company could sell a compelling story of future market dominance or revolutionary technology, it should go public. The prevailing wisdom was that in the fast-evolving internet landscape, being first to market and rapidly acquiring users were more critical than immediate financial viability. This led to significant capital inflow into tech startups, with investors willing to fund extensive burn rates in the hope of backing a future market leader.

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While technology and internet companies dominated the IPO market in 1999, the largest IPO of the year was United Parcel Service (UPS). The company went public in November 1999 and at the time it was the largest IPO ever conducted, and today the American shipping and logistics company dominates the industry together with FedEx and DHL.

NVIDIA went public in January 1999 and has since had a remarkable journey fueled by the growth in demand for AI. When the company had its IPO, it was still trying to fully establish the product which has since made it famous: the GPU.

Further reading: The Story of Jensen Huang and Nvidia

The tech company Akamai, which focuses on Content Delivery Networks and cybersecurity, had its IPO during the year. Like many other companies going public in 1999, Akamai had a stellar first day on the market, and its stock closed at $156 compared to the offering price of $25.

When F5 Networks, now F5, Inc., went public in 1999, the company had only been in existence for three years. However, with a solid business and products in high demand, the company managed to flourish even post-crash.

But it wasn't just tech and internet companies going public in 1999. Investment banks and asset managers such as Goldman Sachs and BlackRock had their respective IPOs while the dot com bubble continued to inflate.

One of the internet companies that had their IPO in 1998 and that managed to flourish even after the deflation of the dot com bubble was Booking Holdings. Today, this company is one of the largest travel and booking aggregation operators in the world.

Juniper Networks was founded in 1996 and went public in 1999. It quickly built up a robust market share in the router and related services industry, and today it is one of the larger players in the sector.

While the IPO market of 1999 illustrated the height of investor optimism in the technology sector, it also helped to sow the seeds for the subsequent market correction in the following years. The eventual bursting of the dot-com bubble led to a dramatic reassessment of the value and viability of internet-based companies, culminating in a more cautious approach to IPOs and investments in the tech sector in the years to follow.