Speculative valuation of unprofitable companies: Many internet startups were valued on user growth or future potential rather than actual earnings.
Easy access to capital: A booming IPO market and eager venture capital funding let companies raise huge sums with unproven business models.
Herd behavior: Rapid gains attracted more speculative investment, further inflating prices.
Effects
A roughly 78% NASDAQ decline from its March 2000 peak to its 2002 trough.
A mild 2001 recession, compounded by the September 11 attacks later that year.
Lasting skepticism toward unprofitable growth stories, though this skepticism eased again in later tech cycles.
Survivors like Amazon and eBay went on to become dominant companies, showing the bubble didn't discredit the internet's long-term impact — just the era's speculative excess.