He Is Sort Of A Celebrity, Has A Funny Beard And A Web Site. Let’s Give Him $84 Million: And Other Tales Of The Late 1990s At The Nasdaq Stock Market

Drkoop.com anyone?
Publish date:

Did not expect to outlive namesake website by a dozen years.

As all milestones must, last week’s at the Nasdaq induced some serious nostalgia, with copious reminiscences of the last time that index reached such dizzying heights, including, of course, where are they now? features and reflections on why it took the Nasdaq 15 years to dig out of its hole. The latter brings us to everyone’s favorite cautionary tale, Drkoop.com, in which investors thought it a good idea to give $84 million to an 83-year-old former polarizing U.S. Surgeon General out of office for a decade to support the expansion of his consumer health website. And then thought it an even better idea to bid that stock up fourfold within a month. All of which proved a very bad idea.

Its stock surged 83% to $16.44 in the company’s trading debut in June 1999 on its way to a high north of $36 that July.

But by March 2001, dr-koop.com shares were trading at about 20 cents and faced delisting. Later that year, the company folded.

What went wrong? The one guy who says he saw it coming explains.

“I remember thinking, ‘You don’t really have a business. How can you be going public?’” said Mr. Rooks, who now is a principal at ST Advisors, a strategic-advisory-services firm he founded.

What funny times, when one didn’t really need a business or any of the kind of metrics generally desired to raise gobs of money for internet-based businesses.

Drkoop.com Epitomized Hype of Tech Boom and Bust [WSJ]
Dot-com Era Heavy Hitters: Where Are They Now [WSJ MoneyBeat blog]


Nasdaq Officials Would Just Like To Point Out That Anyone Who Lost Money As A Result Of The Exchange's Incompetence Have Little To No Legal Recourse

Oh you can try a lawsuit but, historically speaking, it won't do shit. Nasdaq is sending a message to firms weighing lawsuits related to trading losses in Facebook's initial public offering: winning won't be easy. The exchange operator believes it is protected by its contracts with members and by its unusual legal status, which is rooted in its dual role as a regulatory body as well as a business that makes money running markets. Exchange officials in recent weeks have pointed out to analysts that Nasdaq has never been successfully sued over a trading error. "When you look at member agreements that people sign, it's quite explicit that they're bound by that accommodation policy," Robert Greifeld, Nasdaq's chief executive, said last week at a Sandler O'Neill + Partners conference, referring to legal agreements capping the exchange's payouts linked to system problems...Banks and brokers have estimated they lost hundreds of millions of dollars due to technical problems during Facebook's May 18 debut. The glitches forced Nasdaq to delay Facebook's opening, and left trades involving millions of shares unconfirmed for hours. Amid the chaos, traders were forced to guess their positions and place additional orders based on those estimates. When Nasdaq delivered the results of the trading Friday afternoon, many firms were caught off guard and scrambled to reposition. According to Greifeld, the last guy who tried to get his money back "trades on the pink sheets now" but take your best shot. Nasdaq Claims Strong Defense [WSJ] Related: UBS Not Sweating The Small Stuff