What If You Had Invested $1,000 in Amazon’s IPO?
On May 15, 1997, Amazon.com went public on the NASDAQ stock exchange, offering 3 million shares at $18 per share. At the time, the online bookseller had a market capitalization of $438 million and had yet to turn a profit. However, the company’s founder and CEO, Jeff Bezos, had a bold vision of creating “the everything store” that could sell anything to anyone, anywhere, anytime. And that vision, along with the rapid growth of the internet and e-commerce, would prove to be a game-changer for Amazon and its investors.
So, what would have happened if you had invested $1,000 in Amazon’s IPO? Let’s do the math.
Assuming you had bought 55 shares at $18 each, your initial investment would have been $990, leaving you with $10 in cash. At the end of the first trading day, Amazon’s stock closed at $23.50, giving you a paper profit of $277.50, or a 28% gain. Not bad for a day’s work, right?
But that was just the beginning. Over the next two decades, Amazon’s stock would go on a wild ride, fueled by the company’s expansion into new markets, innovations in technology and logistics, and Bezos’ relentless focus on customer experience and long-term growth. Despite some setbacks, such as the dot-com crash of 2000 and the recession of 2008, Amazon kept growing and diversifying, becoming not only the largest online retailer in the world but also a major player in cloud computing, advertising, streaming, and other industries.
As of March 22, 2023, Amazon’s stock price is hovering around $3,100 per share, more than 172 times its IPO price. If you had held onto your 55 shares, they would be worth $170,500, excluding dividends and taxes. In other words, your $1,000 investment would have turned into $170,510, a staggering 17,951% return. That’s enough to buy a nice car, a small house, or a year’s worth of tuition at a top university.
Of course, this is a hypothetical scenario that assumes you had bought and held Amazon’s stock for more than 25 years, without selling or buying more shares. In reality, most investors would have faced many temptations and challenges along the way, such as market fluctuations, industry disruptions, regulatory issues, and personal needs and goals. Moreover, past performance is not a guarantee of future results, and not all IPOs turn out to be winners.
Still, the story of Amazon’s IPO is a powerful reminder of the potential of investing in innovative and visionary companies that can disrupt and transform entire industries. It also shows that patience, perseverance, and a long-term perspective can pay off in the stock market, as well as in life. And who knows, maybe the next Amazon is just around the corner, waiting for you to invest in its IPO.