20 May 1999: eToys more than triples on its IPO
Online toy seller eToys began trading on May 20, 1999 and more than tripled on its first day, giving it a market value larger than Toys R Us, which actually made money and owned hundreds of stores. Investors were paying for the idea of e-commerce, not the economics of shipping toys at a loss. eToys filed for bankruptcy in early 2001.
The lesson: Market value is not a measure of a business's worth; profits eventually are.
What it meant for investors
$1,000 in eToys at the start of 2000 → $0 today, vs $4,626 in the S&P 500.
We start the clock at the start of 2000, the first year in our price data after the event. eToys went to zero, so the position is worth nothing at all; the index turned the same money into $4,626.
What eToys teaches: A correct prediction about the future (people will buy toys online) is worthless if the company you back runs out of cash before that future pays.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2000 | $25.00 | $0 | $4,626 |
green = beat the S&P 500 · red = lost money
What if you bought eToys? Every starting year and the full story →
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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