Cisco Stock Hits New All-Time High, 25 Years After the Dotcom Bubble Burst (ft.com)
- Reference: 0180363805
- News link: https://slashdot.org/story/25/12/11/2013233/cisco-stock-hits-new-all-time-high-25-years-after-the-dotcom-bubble-burst
- Source link: https://www.ft.com/content/b27ae706-6244-4337-81cd-5204bd2b9a00
Cisco's trajectory draws obvious comparisons to Nvidia, today's dominant "picks and shovels" supplier for the AI boom. Nvidia trades at a price-to-earnings ratio above 45 and an enterprise value-to-sales ratio near 24. At its 2000 peak, Cisco traded at a P/E above 200 and EV/sales of 31.
[1] https://www.ft.com/content/b27ae706-6244-4337-81cd-5204bd2b9a00
Inflation (Score:2)
While the stock is at an all-time high in absolute numbers, the article foolishly doesn't incorporate inflation. Cumulative inflation since 2000 is 80-90%, meaning that in inflation-adjusted numbers Cisco stock is a bit over half its all-time high.
Re: (Score:1)
That's true but you also have to add in the dividends Cisco has paid starting in 2011, offsetting it somewhat, particularly if they were reinvested.
Re: (Score:2)
yeah, i just did a check. Adjusting for inflation, the stock price would need to be around $154 to be comparable in value. (Assuming total volume has remained relatively constant in that time).
that is, at $80 now, that means the stock is really worth only $42 in 2000 dollars.
So it is a number that's the same, but the value of $80 if you held onto it this entire time is still far less than you had when you started. Dividends won't quite add up to that gap - if 50c per share per quarter, and you kept the cash
Re: (Score:2)
note, that was a napkin calculation - i didn't know they started dividends as late as 2011, and I don't know the dividend per share. i just put some numbers in to give the impression, but unlike certain politicians, I'm not trying to prove a point to influence policy decisions. Thought experiment, nothing more. :)
Re: (Score:3)
Yeah, and then if you add dividends you also have to note those are taxed in that year at qualified dividends rates, somewhat negatively offsetting the dividends. It's a complicated math but I think we can see from the basic calculations the stock is not at an "all-time high" realistically.
Now adjust the price (Score:1)
... for inflation.
Re: (Score:3)
True, still not at the peak, but speaking of adjusting for inflation...
Cisco from 1998 to 2001 had a crazy anomalous valuation that was the biggest of the big examples of the dot-com bubble run amok. That behemoth of a company had an inflation-adjusted market cap of about a trillion dollars. Microsoft was in same ballpark, with Oracle and Intel a bit less, but still big examples of the dotcom bubble.
This time around, Google is 3.8 trillion, Meta is $1.6 trillion, Microsoft is $3.6 trillion, Amazon is $2.5
Re: (Score:1)
CSCO market cap topped out about $530B in Y2K, edging above GE (the most valuable public company before that). It's $317B today, so there's been substantial dilution of the stock in those 25 years, even with the buybacks.
And while it's true that the valuations of tech companies in general are much higher than in Y2K, their revenues are also much higher. Apple's is $400B, and that's not from the AI bubble.
Re: (Score:1)
Cisco would need to hit $150.77 to be worth as much as $80.06 in the year 2000.
Not back to its old level by a long shot.
Well, crap sells, obviously (Score:3)
Apparently, having bad and severely bad security problems in your networking and security products is not a factor when you want to sell them. Nice market failure.
I had the option to take Cisco stock 20 years ago (Score:2)
But I insisted on remaining a contractor, at the time I was more into cash than into accepting hopes and dreams as payment.
Re: (Score:2)
I got Cisco stock 31 years ago, luckily I sold most of it off before 2000.
Regret not holding it a little bit longer but I was lucky and can't complain.
I see the same happening again with the AI bubble.
Another generation of lucky individuals who'll benefit from a stock option leg up like I did.
Will it pop sooner I wonder?
I'd advise cashing in chunks on a regular basis and being happy with what you get rather than holding on and dreaming of more.
Quintupled is going backwards (Score:1)
> Revenues have nearly quintupled since 1999, profits have quadrupled, earnings per share have grown eightfold, and margins have remained healthy throughout.
If you'd bought gold in 1999 you would have been paying $300/ounce - it's around $4500/ounce currently.
Re: (Score:1)
plus $80.06 in $2000 is $150.77 today
Cisco has a long way to go for its stock to hit glory days level
Re: (Score:2)
Of course pre-pandemic, it was around $1200/ounce, and it's been just insane since the pandemic set in until now...
Mixed baselines (Score:2)
TFS says "The company's fundamentals improved dramatically over that period," but then uses 1999 as the baseline instead of the peak day in 2000. I think thatâ(TM)s how it's possible that "profits have quadrupled" while "earnings per share have grown eightfold": the article skipped over the final 2-for-1 split in Sept 1999. Pretty poor financial reporting though.
Imagine (Score:2)
Imaging bag holding for 25 years.
You all should feel sorry for me.
Re:Imagine (Score:4, Informative)
That sucks. I bought 10 shares a few weeks ago in anticipation of earnings and sold this morning for a profit. Yes ten whole shares. You all should feel good for me.