After Yelp reported its earnings for the second quarter of 2015, its stock took a hammering — even I got a touch of vertigo while peeking at its annual stock performance. The company’s market capitalization has fallen 59 percent between July 31, 2014, and July 31, 2015. Yelp’s fate prompted me to wonder, How are other older publicly traded internet companies doing?
I picked some random names from the post-internet-bubble era, the companies that loosely speaking were Internet 2.0 companies. ReachLocal appeared in 2003, Yelp got going in 2004, HomeAway in 2004, Bazaarvoice in 2005 and Twitter in 2006. As the chart below shows, these companies have all seen a sharp decline in their stock prices and market capitalization.
The more I look at this chart, the more I wonder about the metabolism of internet companies: They are growing more quickly but also entering their twilight years more quickly. Yahoo and eBay — both nearly 20 years old — have been on a slow decline. The next generation of internet companies has started swooning south in half as much time.
The only exceptions seem to be companies — Facebook, Google and Amazon, for example — that have reached web scale and have ruthlessly and consistently tried to not only reinvent themselves but also move into new markets. Any thoughts?
Update: I shared the piece on my Facebook and it resulted in a vigorous and enlightening conversation.