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The Chinese Dot-Com Bust

Flag of the People's Republic of China
Eriko Koga | The Image Bank | Getty Images
Flag of the People's Republic of China

The market is beating up on Chinese internet stocks lately. Volume is up and prices are down for names such as DangDang and Youku.com.

Not too long ago, these stocks were investor favorites. But a wave of accounting scandals and fraud allegations have sent investors fleeing.

“It’s 2001 in China,” Revere Capital’s Matt Gohd says.

Gohd described the astronomical valuations of the Chinese Internet stocks as evidence of a bubble back in May, when I ran into him at the SALT conference. Now he thinks they’ll keep going down.

“It’s gravity rearing its ugly head,” he says.

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