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 (NasdaqGS: 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 (NasdaqGM: PNQI) and represents nearly 3% of the ETF’s portfolio.

Groupon is also held in Global X Social Media ETF (NasdaqGM: SOCL), which has been hurt by weakness in shares of Facebook (NasdaqGS: 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 (NasdaqGS: ANGI), Yelp (NYSE: YELP) and Facebook, MarketWatch reported.

The carnage in Internet-related stocks such as Priceline (NasdaqGS: PCLN) and Zynga (NasdaqGS: 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

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