If You Invested $10,000 in Amazon Stock at Its IPO, Here’s How Much You’d Have Today

Amazonof (AMZN 1.74%) We went public in May 1997, and this year marks the 25th anniversary of our listing. A pioneer in online sales at the time, e-commerce remains the heart of his business, but he has also expanded into other markets and has become one of the largest companies in the world.

Towards the end of 2022, Amazon’s stock is down 50% year-to-date amid a broad sell-off in the tech sector, but investors who have held up by buying shares in an initial public offering (IPO) Still sitting at astronomical gains.

Let’s take a look at exactly how much they’ve earned so far and see where Amazon’s stock might go next.

e-commerce, cloud services, streaming, advertising

This is roughly a list of core businesses that generate meaningful revenue for your organization. But it doesn’t cover other emerging areas that Amazon has entered. One is the production of electric vehicles by investing in up-and-coming manufacturers. Rivian AutomotiveAmazon was initially a Rivian customer before deciding it would be fruitful to own one of the fast-growing electric vehicle industry start-ups.

The point is that Amazon’s market valuation has exceeded $1.7 trillion in the past. This doesn’t happen in companies that don’t have an insatiable appetite for growth and expansion.

E-commerce still provides 84% ​​of the company’s total revenue. In second place is Amazon Web Services (AWS), which currently leads the overall cloud computing industry in terms of revenue and range of solutions. The cloud is an increasingly important technology as it enables businesses to move their operations and customer touchpoints online. Whether these companies need simple file storage or advanced artificial intelligence tools, AWS has them covered, and this, he said, will be a $1.5 trillion annual opportunity by the end of 2010. There is a possibility.

In 2021, Amazon will begin reporting advertising revenue as a separate line item (previously included in the e-commerce category). The advertising segment was found to be a financial driver, generating $35.8 billion in sales over the past four quarters. alphabetYouTube — the world’s largest video streaming platform.

With 2.6 billion hits per month, Amazon’s flagship e-commerce website is a dream come true for advertisers looking to sell their products to consumers. But the company has several other potential opportunities to bring in more advertising dollars. For example, the company’s prime video streaming service entered the world of live sports by acquiring NFL rights. thursday night footballOver time, advertising could become a strong revenue driver for Amazon, especially since it posted a staggering 30% year-over-year growth in Q3 alone.

Amazon is having a tough year, but its long-term focus

Because Amazon derives most of its revenue from consumers, high inflation and rising interest rates this year have squeezed household budgets. Amazon’s total revenue is expected to reach $510 billion this year, representing growth of just 8.6%.

But there is some good news. Consumer Price Index data for the past six months suggests that US inflation peaked in his June, so 2023 could be much more favorable for the e-commerce industry.

That said, investors should really focus on the long term. The chart below shows that clearly: In 1997, Amazon’s revenue was just $147 million, the year it went public, and its streak of growth since then has been remarkable.

How much is a $10,000 investment in Amazon’s IPO worth right now?

On May 15, 1997, Amazon went public at $18 per share. Over the past 25 years, management has elected to implement several stock splits to reduce its skyrocketing stock price. This helped preserve the ability of smaller investors to buy the company before partial stock purchases became more or less ubiquitous. Below is a list of those splits .

  • Split 2 for 1 on June 2, 1998.
  • Split 1 to 3 on January 5, 1999.
  • Split 1:2 on September 1, 1999.
  • Split 1 for 20 on June 3, 2022.

Taking into account these splits, Amazon’s IPO price of $18 per share will be adjusted to $0.075 per share. When Amazon closes at $86.77 a share for him on Wednesday, those early investors could make a staggering 115,933% of his earnings.

What does that mean in dollar terms? His $10,000 investment in Amazon’s IPO is worth a whopping $11.5 million today.

This equates to a compound annual growth rate of 31.7%, which is five times the benchmark compound annual return. S&P 500 index for the same period. Simply put, on average, Amazon’s market value growth has been five times that of the market as a whole over the last 25 years.

Can Amazon’s stock price continue to outperform the market over the next decade (and beyond)? Perhaps it’s because the company has reached out to so many transformative industries and is still expanding. It’s because With the stock down 49% in 2022, this could be a great buying opportunity in the long run.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Alphabet executive Suzanne Frey is a member of The Motley Fool’s board of directors. Anthony Di Pizio has no positions in any of the mentioned stocks. The Motley Fool has positions in and recommends Alphabet and Amazon.com. The Motley Fool’s U.S. headquarters has a disclosure policy.

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