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Internet ETFs: Party Like It’s 1999?


Let me know if this sounds familiar: Equities are rising and investors are seemingly complacent, but serious cracks are showing in much-hyped Internet stocks that have gone public recently.

Groupon (GRPN) shares were down more than 26% to an all-time low on Tuesday with investors punishing the stock after a disappointing quarterly earnings report and outlook.

The beaten-down stock is held in PowerShares Nasdaq Internet Portfolio (PNQI) and represents nearly 3% of the ETF’s portfolio.

Groupon is also held in Global X Social Media ETF (SOCL) , which has been hurt by weakness in shares of Facebook (FB) since the recent IPO.

The sell-off on Groupon on Tuesday spread to other newly public firms in the social media space such as Angie’s List (ANGI), Yelp (YELP) and Facebook, MarketWatch reported.

The carnage in Internet-related stocks such as Priceline (PCLN) and Zynga (ZNGA) reminds some financial advisors of the prelude to the dot-com meltdown in 2000.

Let’s just hope it’s a coincidence as the S&P 500 tests the 2012 high and that U.S. stocks will finally break out.

Financial blog Zero Hedge on Tuesday reported that Groupon and Zynga are down 70% from their IPO price while Facebook is off 44%. Since the IPOs, investors have lost $58 billion market cap on the three stocks, according to the report.

PowerShares Nasdaq Internet Portfolio

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.