Ten years ago, on March 10, 2000, the dot-com bubble burst. The tech-heavy Nasdaq peaked at 5,132 and then proceeded to slide downhill fast, taking with it the fortunes of investors who naively thought that anything with the letter "e" in front its name was a golden ticket.
The online pet supply "e-tailer" Pets.com came to mind as I was putting together this week's
Biotech Stock Mailbag and reading through a dozen or so emails of reader comments about my coverage of Sequenom.
Pets.com was a very hot stock back in the early days of the aughts. (Remember its mascot, the talking sock puppet?) Never mind that it really didn't make much sense for pet owners to buy large bags of kitty litter and puppy chow online and wait days for delivery. Forget that Pets.com relied on discounted shipping to attract customers, and the company actually lost money on every order. Back in 2000, e-tailers were a hot ticket on Wall Street and investors were more than happy to overlook the obvious and fatal flaws in Pets.com's business plan.Today, investors seem to have imbued Sequenom with some of that reckless disregard for reality. The troubled developer of non-invasive fetal gene tests, which blew up last year when data for a Down's Syndrome test had to be thrown out, is nonetheless enjoying a stock resurgence, with shares essentially doubling since last December. The stock closed Thursday at $8.01. But as BNET's Jim Edwards summed it up nicely this week, Sequenom investors are "projecting their wildly optimistic expectations onto a real blank slate of a company." I wonder how much angry email he got for that remark? I know my inbox filled up fast after my last Sequenom column in which I dissected Sequenom's fuzzy math being used by one analyst to justify her newly minted $16 price target. "Gofigure" writes, "So, what are you saying here is? Sequenom will not have any viable test out this year? What is your proof of it? Are you shorting the stock?" "Stockfundmanager" takes Jim Cramer and me to task for being "wrong about Sequenom since $2.55 up until the current $8.60 and you keep bashing instead of admitting you are wrong. You are becoming suspect of having a motive to your bashing... My price target is $25 versus Cramer's of $3. We will see who is right me or Cramer."