Dot com hysteria supposedly peaked in 1999. Sixteen years later, crazy valuations are back. Amazon rival Jet.com opens for business tomorrow, already worth $600 million and possibly $3 billion by year end! Are we reaching absurd market values again? Valuing a company with virtually no sales today at $600 million (and possibly $3 billion by year end!) is beginning to feel a bit optimistic. By contrast, Cracker Barrel is worth just over $3 billion and has almost $2.5 billion in revenues.
We are not suggesting that Jet.com is a bad business model but we do caution you not to get too caught up in the lofty valuations we are currently seeing. After moving up 85% in 1999, the NASDAQ dropped over 60% in the next three years and took 15 years to get back to its 1999 high. So try not to get too caught up in the hysteria!