When it comes to growth potential over time, few stocks have matched this Amazon (NASDAQ: AMZN). The e-commerce pioneer has evolved from an online bookseller to a conglomerate at the forefront of several retail and technology niches.
In retrospect, if one had had the patience to wait and the fortitude to weather massive declines, a $1,000 investment in the company’s initial public offering (IPO) would have more than paid off for shareholders.
Amazon’s growth
A $1,000 investment at the closing price on the day of the IPO and not sold would be worth about $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, adjusted for the split). Assuming one could purchase fractional shares, the 42.55 shares purchased that day would have grown to 10,212 shares worth $182.69 each at the time of writing.
Those who have owned the stock throughout its 27-year history have not followed a predictable or easy path.
Investors might have expected Amazon to venture beyond just selling books; it was virtually impossible to predict the sheer variety of products it would sell or whether it would spearhead the cloud computing industry through Amazon Web Services (AWS). This is critical because AWS generates the majority of its operating revenue.
Investors also suffered a brutal sell-off during the dot-com bust. Between 1999 and 2001, Amazon’s shares fell as much as 95%, not returning to their 1999 high until 2009.
For a time, that decline made it more like many of the failed online retailers of the time. So investors would have had to strongly believe in founder Jeff Bezos’ vision to hold on to their shares during that period.
Ultimately, the history of Amazon stock outlines both the rewards and difficulties of IPO investing. While the potential returns can be enormous, it typically takes vision, analytical skills, discipline and a high tolerance for pain to identify such investments early and grow them 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 Fool’s board of directors. Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
If you invested $1,000 in Amazon stock 27 years ago, here’s how much you’d have today. originally published by The Motley Fool
