In the realm of long-term growth, few companies have rivaled the meteoric rise of Amazon. From humble beginnings as an online bookstore, the tech giant has expanded its reach to dominate multiple sectors of retail and technology. For those who had the foresight and courage to hold onto their shares through turbulent times, a $1,000 investment in Amazon’s initial public offering would have yielded a staggering return.
As of today, that initial investment would be worth a staggering $1.87 million. When Amazon first went public on May 15, 1997, its pre-split closing price was $23.50 per share, equivalent to $0.098 per share after adjusting for splits. Assuming fractional shares were available, the 42.55 shares purchased on that day would have grown to 10,212 shares, each valued at $182.69.
However, the journey to this point was far from smooth. Investors who held onto their shares for the entire 27-year period faced numerous challenges, including a brutal sell-off during the dot-com bust. Between 1999 and 2001, Amazon’s stock plummeted by as much as 95%, and it didn’t recover to its 1999 high until 2009. This dramatic decline made it seem like many other failed online retailers of the time.
Despite these setbacks, Amazon’s founder Jeff Bezos had a clear vision for the company, which ultimately propelled it to success. Today, Amazon Web Services (AWS) generates the majority of the company’s operating income, a development that few could have predicted.
The story of Amazon’s stock serves as a reminder of the rewards and difficulties of investing in initial public offerings. While the potential returns can be enormous, it requires a combination of vision, analytical skills, discipline, and a high tolerance for risk to identify such opportunities early and allow them to reach their full potential.
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