The Netscape IPO 1995: the Big Bang of the dot-com bubble
How the August 1995 listing of the Netscape browser ignited the fuse of the largest tech bubble in history
On August 9, 1995, Netscape went public at $28 per share. The stock opened at $71 and closed at $58. In one day, a 16-month-old startup was worth $2.9 billion. The official starting point of the dot-com bubble.
The browser that changed everything
Netscape Communications was founded in 1994 by Marc Andreessen (co-creator of the Mosaic browser) and Jim Clark. Netscape Navigator was the browser that was making the Internet accessible to the general public. In 1995, it had 75% of the browser market.
The company was 16 months old, had zero profits, and a few million in revenue.
The August 9, 1995 IPO
The IPO was set at $28 per share. Demand was so high the price was nearly doubled from the original estimate ($14). On IPO day, the stock opened at $71 — nearly triple the offer price — and closed at $58.
Netscape was valued at $2.9 billion. Without profits. It was the first time the market valued an internet company in the billions.
The legacy
The Netscape IPO gave the green light to the entire dot-com bubble. If Netscape could be worth $3 billion without profits, any company with ".com" in its name could be worth something.
- IPOs of nascent sectors are valued on potential, not current fundamentals: Netscape had enormous potential — but $2.9 billion was irrational in 1995.
- Historic IPOs mark the beginnings of bubbles: the Netscape IPO is the starting point of the dot-com bubble just as 2017 ICOs mark the beginning of the crypto bubble.
- Browsers win the attention wars: Microsoft understood the danger and launched IE for free to destroy Netscape's business.