Amazon went public May 14, 1997 at $18 per share. According to its original prospectus, Amazon (AMZN) had 23.8 million shares of common stock outstanding. The market valuation the day of its IPO was $429 million; now it is $481 billion. Investors patient enough to buy and hold AMZN over the course of 20 years received a mind boggling annualized return of 38.44%, equivalent to a 66,566% total return. $5,000 invested into Amazon in ’97 is worth $3.3 million today. Jeff Bezos, Founder and CEO, has become one of the world’s richest individuals; Forbes estimates Bezos’ net worth exceeds $84 billion. Bezos has been a large seller of AMZN stock over the years to diversify his wealth, but he still owns 17% of Amazon’s total outstanding shares. At $1,000 per share, Bezos’ holdings in AMZN are $81.9 billion.
Amazon’s transformation from an online book store merchant to provider of everything to everyone has upended the $5.3 trillion retail marketplace. Amazon is reported to have over 300 million people using its services yearly, and the company is responsible for a quarter of all retail growth. Amazon’s Prime membership provides its customers with a bevy of benefits, specifically, free shipping on most online orders. Roughly half of American households have opted for Prime membership, an amazing testimonial in itself. Amazon is rapidly entering the grocery store arms race with its newest venture Amazon-Go, where customers using the Amazon app walk into the store and check out virtually just by supposedly putting items into the cart. Amazon-Go stores hardly have any employees; talk about savings. Drones are next. Amazon says that it will deliver purchases to our doorsteps via drones within an hour. Amazon is also competing in providing home services for its customers. This article would take forever to cover all of the things Amazon is doing. Here is the company’s about link.
Amazon’s stock valuation has always been in the stratosphere. It did not turn a profit its first five years as a public company. The Amazon story brings up the age old question, “Is it better to bet on the horse or the jockey?” Jeff Bezos has beaten just about every CEO out there. In this stock’s case, bet on the jockey. Click here to subscribe to Chip’s investment newsletter.
IMPORTANT DISCLAIMER: The opinions made herein are for informational purposes and are not recommendations to any person to buy or sell any securities. The information is deemed to be reliable but its accuracy and completeness are not guaranteed. 1st Discount Brokerage does not accept any liability for the use of this column. Readers of this column who buy or sell securities based on the information in this column are solely responsible for their actions. Investors/traders are advised to satisfy themselves before making any investment. Nothing published on this site/ article should be considered as an investment advice. It’s not an offer to buy or sell any security. Readers are solely responsible for their profits or losses. The writer owns Amazon stock at the time of this article.
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