Relating to growth potential over time, few stocks have matched Amazon (NASDAQ: AMZN). The e-commerce pioneer has evolved from a web based bookseller to a conglomerate that leads the best way in several niches of retail and technology.
In hindsight, if one had the patience to attend and the fortitude to ride out massive declines, a $1,000 investment in the corporate’s initial public offering (IPO) would have paid off handsomely for shareholders.
Amazon’s growth
A $1,000 investment on the closing price on the day of the IPO and never sold can be price roughly $1.87 million today. The stock made its debut on May 15, 1997, at a pre-split closing price of $23.50 per share ($0.098 per share split-adjusted). Assuming one could buy fractional shares, the 42.55 shares bought on that day would have grown to 10,212 shares price $182.69 each as of the time of this writing.
Those that owned the stock for all the 27-year history have not been on a predictable or easy path.
Investors could have anticipated Amazon would enterprise beyond the sale of just books, it was next to not possible to predict the large number of products it will sell or that it will spearhead the cloud computing industry through Amazon Web Services (AWS). That is critical because AWS generates the vast majority of its operating income.
Investors also endured a brutal sell-off through the dot-com bust. Between 1999 and 2001, Amazon’s stock fell as much as 95% and didn’t return to its 1999 high until 2009.
For a time, that drop made it look more like most of the failed online retailers on the time. Hence, investors would have needed to have a powerful belief within the vision of founder Jeff Bezos to carry their shares through that period.
Ultimately, the history of Amazon stock outlines each the rewards and the difficulties of IPO investing. While the potential returns could be massive, it typically takes vision, evaluation skills, discipline, and a high pain tolerance to discover such investments early and permit them to grow to their full potential.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of directors. Will Healy has no position in any of the stocks mentioned. The Motley Idiot has positions in and recommends Amazon. The Motley Idiot has a disclosure policy.
If You’d Invested $1,000 in Amazon Stock 27 Years Ago, Here’s How Much You’d Have Today was originally published by The Motley Idiot