Nasdaq Closes Above 3,000 for 1st Time in 12 Years
The tech-heavy Nasdaq composite stock index closed above 3,000 points on Tuesday for the first time since 2000, when it sunk below that mark on its way down from a peak of 5,000 reached during the hey-day of the Internet bubble. The landscape is decidedly different than it was back then, as some of the dominant players of the late 90s are no longer around, and the tech sector is dominated by companies considered minor entities back then.
The world’s largest tech-company, and in fact the world’s most valuable company over all, is Apple Inc., which has soared to the top of the tech universe over the last few years on the popularity of its mobile devices the iPhone and iPad. Back in 2000, Apple represented just 0.1 percent of the overall market value of the Nasdaq, whereas it makes up 11 percent of the index’s value today. The Nasdaq’s second-biggest entity, meanwhile, is Google, which was still four years away from its IPO in 2000.
While new players have risen to lofty heights since 2000, some of the biggest companies at the time have fallen by the wayside. Sun Microsystems, for example, was the Nasdaq’s fourth most valuable firm, with a market cap of more than $90 billion. The company faltered drastically in the late 2000s, eventually being sold in a fire sale to Oracle in 2010 for just $5.7 billion. Another of these fallen tech firms is Siebel Systems, ranked tenth among Nasdaq companies in 2000 with a value of about $30 billion. Siebel was also acquired by Oracle for the bargain basement price of $3.7 billion in 2006.
The landscape is markedly different now than it was the last time the Nasdaq closed above 3,000, and analysts say that companies’ market caps are more firmly in touch with reality. Back then, Nasdaq issues were trading at an average of 185 times earnings, as stock values were based on hope and unsustainable growth projections. Currently, Nasdaq firms trade at a more reasonable 25 times their earnings, making the likelihood of further growth more realistic.