What's up guys and welcome back to wall street millennial on this channel, we cover everything related to stocks and investing with the technology stocks sitting at all-time highs. Many investors fear that we are in the midst of a market bubble. Many market observers are calling the current state of the markets the biggest bubble they've ever seen, but regardless of what you think about today's tech valuations, we're still nowhere near the insanity of the dot-com bubble of 2000. Investors saw the potential of the internet and wanted to get a piece of the action.

Thousands of startup companies took advantage of this hype to raise trillions of dollars in public equity markets. Most of them did not have viable business models. The vast majority failed to live up to the hype, and investors lost almost everything in this video we'll go over the top 4 craziest stocks from the dotcom bubble. Our first entry on the list is webvan.com.

In 1971, two brothers by the names of tom and lewis, borders founded the borders bookstore in ann arbor michigan. They were successful throughout the 70s and 80s and expanded rapidly throughout the country. It was acquired by kmart in 1992, giving the borders brothers a huge payout around that time. The internet was first gaining steam and lewis borders decided to invest his borders, bio money into a new dot com business.

He saw that the grocery shopping industry was ripe for disruption with the power of the internet. He decided that he would make an online delivery business which would ship fresh groceries to people's homes. To this end, he founded webvan.com webvan promised to deliver groceries to people's homes within a 30 minute window of their choosing. Investors loved the idea, and they raised 400 million dollars from venture capital investors, these included sequoia capital, softbank capital and goldman sachs.

They raised an additional 375 million dollars from an initial public offering in 1999.. This was at the height of the dot-com craze, and investors bid up the share price to 25, giving them a market cap in excess of 4 billion, not bad for a company that was barely 3 years old. They expanded rapidly across the united states by 2000. They operated in san francisco, los angeles, dallas, chicago and atlanta, just to name a few cities.

They spent billions of dollars on distribution, centers and trucks, while they were great at marketing. None of the management team had any experience in the grocery business, so they had no idea how to run the operation efficiently. In 2000 they had 178 million dollars of revenue, but 525 million dollars of expenses. This led to a 347 million net loss with the business itself burning cash.

They relied on constant capital, infusions from investors just to keep the lights on. When the dot-com bubble burst in 2000, they were unable to raise any more money by the summer of 2001. The stock price declined from 25 per share down to 6 cents in june of 2001. They finally ran out of cash and filed for bankruptcy, laying off their 2 000 employees, their food delivery, business model could have worked, but they were well ahead of their time.

They lacked the technology and logistics capabilities to run the business profitably. Today, ecommerce players, including amazon, are running successful, grocery delivery businesses. The next entry on our list is pets.com. It was a pet supplies.

Ecommerce platform. The company got off to a strong start with amazon investing tens of millions of dollars to acquire a 50 stake in the company in february of 2000, the ipo'd on the nasdaq raising 82 and a half million dollars. They came to exemplify the excesses of the com era with their aggressive advertising. In 1999, they spent 11.8 million dollars on advertising, but only generated 619 thousand dollars in revenue.

This is one of the worst advertising rois in history. In 2000, they decided to double down on their marketing campaigns and hope to turn things around. They spent an additional tens of millions of dollars on advertising, including a super bowl commercial. They used the sock puppet as their mascot, which was very memorable, but many viewed it as cringy.

This succeeded in increasing sales. The problem is that the more they sold the more money they lost to entice customers they offered free shipping. Customers mainly bought heavy items such as dog food and cat litter. At the time, logistics networks were not as efficient as they are today, so these heavy products had a very high shipping cost.

They also couldn't charge very high prices, otherwise people would just go to a brick and mortar store to buy them. Usually a retailer charges a price slightly higher than the cost of acquiring the merchandise, and this is how they make a profit, but pets.com did the opposite. On average, they actually sold their products for 27 percent less than their own cost. After you factor in shipping expenses, on top of these gross losses, they also burned tens of millions of dollars per year on advertising, because their unit economics were unprofitable.

This path towards bankruptcy actually accelerated as their sales increased in a desperate attempt to cut costs. They moved their headquarters from san francisco to indiana, but this did nothing to solve the fundamental lack of profitability in their business model as their cash burn, accelerated their stock nose. Dived, it started trading at 10 per share on the ipo day. It immediately started tanking until it reached zero dollars in 2001., they filed for bankruptcy and what remained of their assets was acquired by petsmart.

Pets.Com has come to exemplify the craziness of the dot-com bubble. They never had a viable business strategy and there was no path to profitability, but the idea of a pet focused e-commerce business can be successful. In 2019, chewy ipo'd at a valuation of 8.8 billion dollars. Famous short seller, david einhorn was quick to compare chewy to pets.com, saying that it was overvalued and couldn't make money.

However, chewie's distribution networks are much more sophisticated than pets.com ever was, and shipping costs are much cheaper. Today, chewie has been an incredible success story and its valuation has surged to almost 40 billion dollars. Pets.Com wasn't a horrible idea. It was just ahead of its time.

Next off we have flus.com flues.com sold a virtual currency called fluz users could spend their flus on the e-commerce websites of participating. Retailers online merchants could give away free flutes as a marketing gimmick to promote their own websites. The idea was based off frequent flyer programs at airlines. The difference was that flutes would be a centralized platform where you could use the currency to purchase from a wide variety of retailers.

They spent aggressively on advertising, giving away free fleets and running commercials with famous tv personality, whippy goldberg by 2001. They had burned through 50 million dollars of venture capital funding. While the idea was unique, it turned out to be a complete failure. There was no reason at all to use flues when you could easily just pay online with real money.

Around the same time, internet-based payment services, like paypal, were coming online. These offered a much simpler and easier customer experience, while adoption among regular consumers was minuscule. There was one group of users who found fluz quite useful: russian hackers used stolen credit cards to buy flues, which they then regime for real money. They then use this for money laundering after the money was converted to flutes and then converted back.

There is no way to trace it to the hackers. In 2001, the fbi started investigating flus. Their banking partners didn't want to be implicated in the money laundering, so they ceased their relationships with the company in august of 2001 flews, officially shut down the virtual currency that people had deposited with the website could not be redeemed and became worthless. Next on our list is ask jeeves: it was a search engine launched in 1997..

At that time, google had not yet been founded and the search engine market was wide open to the taking their mascot was a gentlemanly butler named jeeves. The idea was that you could ask jeeves a question and he would search the internet for the answer. For you, it was initially a major success and they became one of the major search engines in the us they ipo'd on the nasdaq in 1999.. At around that same time, a search engine competitor named google was just starting to ramp up google's search algorithms were much more advanced and could deliver more relevant results to users.

As ask jeeves lost market share to google, their revenue started to decline rapidly. The stock tumbled. Almost 90 in 2001, as a dot-com bubble, was deflating by 2005. They could no longer survive as a stand-alone company and were acquired by media conglomerate iac.

In 2010. They finally shut down their languishing search engine business and pivoted to ask.com, which was a question answering website. Similar to quora, however, its popularity has remained limited, alright, guys that wraps it up for this video. What do you think about these bubble stocks? Are there any others that you think we should have included on this list? Let us know in the comments section below as always.

Thank you so much for watching and we'll see you in the next one wall, street millennial, signing out.