28% Of Investors Now Own Internet Stocks
Great stat found its way off the pages of USAToday the other day. The piece
said that 28% of investors owned Internet stocks.
As an investment analyst in the field since 1994 I wanted to walk through
the phenomenom of what has become a truism, that mainstream investors now
own Internet stocks in large quantities.
In 1994 you could count less than 10 "pure play" Internet stocks. Probably
more like 2, and that was stretching it: Cisco and Sun, both more
It wasn't until early 1996 that pure 'Internet' stocks emerged on the
Street, taking the lead from the late 1995 rocket ship called Netscape (now
part of AOL which acquired it for $15 billion stock this year).
As 1996 dawned Excite, Lycos, Yahoo and Infoseek came on the scene with
IPOs and before the year ended more than 25 stocks could be called 'Internet.'
And nobody but Web developers knew much about any of them. Wall Street
didn't know much and institutional investors had no reference to invest in
By the time 1997 rolled into view more than 50 pure plays existed, but
still no mainstream awareness of the Internet stock sector.
Ditto until mid 1998 when the emergence of the Web-based brokerages ramped
up (Schwab, E-Trade, Ameritrade, Datek, etc.) making it easier for Internet
investors to trade. Summer 1998 was also the time when the more prominent
Internet companies who had gone public in 1996 began posting positive
earnings (or merging).
As backdrop to this raised profile in summer 1998 remember that email, Web
page making, chat, instant communications, ecommerce, and more innovation
pushed Internet usage into new realms. The Internet went from geek toy to
fundamental consumer and corporate must have--and continues to do so.
As a group the ebb and flow of buildout and adoption has caused Internet
stocks to peak and valley every year. Since 1998, however, Internet stocks
have shown an effective climb over time, despite corrections.
As the Internet plows ahead into changing business, changing consumer
behavior, more and more Internet companies have gone public and more and
more companies are Internet companies. Since 1994 I count more than 300
Internet stocks going public. More stocks, more investors.
To the point now where an important stat like the one from USAToday says
that 28% of investors own Internet stocks. That stat reveals the widespread
opportunity of an industry that I think may be 10% built out with 90% to go.
If that trend continues, by 2001 perhaps 35% of investors may own Internet
stocks. By 2010 I think most technology companies will be driven by
"Internet-ness" and that could mean more than 50% of investors could have
some exposure to Internet stocks.
NetStock! by Steve Harmon
ceo of e-harmon.com
"for the internet investor"