The modern tech bubble and e-commerce companies

The tech bubble

Over the past several years the market has become very volatile. A lot of analysts have attributed this volatility to the increased number of speculative investors in the stock exchange. Unlike long time ago the stock exchange wasn’t understood by a lot of people and therefore few people invested their money in the stock exchange. However with the advent of the internet there has been a growth in the number of people that invest through the stock exchange. Companies that are listed on the stock exchange are called public companies. This is due to the fact that the companies’ stock is available for purchase on the stock exchange. The availability of a company’s stock on the stock exchange means that individuals are capable of buying the company’s shares. A stock represents a share in the ownership of a company. However individuals cannot just go to the stock exchange and buy stocks. They need to go through a company called a stock brokerage. Nowadays stock brokerages have been made to be electronic. This means that anyone can now invest in stocks from anywhere around the world. This has led to an increased number of speculative investors looking to cash out a quick return in a short space of time.

The tech bubble in e-commerce companies

Due to the high volatility e-commerce companies might be inside a tech bubble that is about to burst. When it bursts it will take the entire market with it much like the global credit crunch of 2008. Amazon is a typical example of a tech bubble that has taken over many American companies. Amazon has 3 times the market capitalization of Walmart but only has a yearly revenue of 177 billion dollars whilst Walmart has a yearly revenue of $500 billion dollars. The rapid growth of Amazon is mainly due to speculation.