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Downward-Sloping Demand Curves the Supply of Shares and the Collapse of Internet Stock Prices

By:

Schultz Paul

Material type: Article

ArticleLanguage: ENG Series: ; 63Publication details: Feb 2008 0Edition: 1Description: 351-378 PpSubject(s):

Internet Stock Prices

DDC classification:

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Summary: Over March and April 2000, Internet stocks lost 56%, or $700 billion. This sudden collapse has been attributed to an increasing supply of shares from lockup expirations and equity offerings. I show that Internet stocks collapsed in this period regardless of whether their lockups expired. Furthermore, daily Internet stock portfolio returns were almost unaffected by the number or dollar amount of lockup expirations that day, or by the amount of stock offered in IPOs or SEOs. Most of the Internet stock decline is explained by poor marketwide returns, particularly for growth stocks.

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Item type	Current library	Call number	Status	Date due	Barcode
Articles	Main Library	Sch (Browse shelf(Opens below))	Available		AR9866

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Over March and April 2000, Internet stocks lost 56%, or $700 billion. This sudden collapse has been attributed to an increasing supply of shares from lockup expirations and equity offerings. I show that Internet stocks collapsed in this period regardless of whether their lockups expired. Furthermore, daily Internet stock portfolio returns were almost unaffected by the number or dollar amount of lockup expirations that day, or by the amount of stock offered in IPOs or SEOs. Most of the Internet stock decline is explained by poor marketwide returns, particularly for growth stocks.

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