It's a staggering amount for such a small investment.
The growth of Amazon.com (AMZN -0.27%) is remarkable. In less than 25 years, it has become one of the biggest retailers in the world. It has successfully expanded well beyond selling books to cloud service solutions,advertising,digital streaming,and smart speakers.
What started as a handful of employees,including founder and CEO Jeff Bezos, on their hands and knees packing orders is now a global operation with 750,000 employees and $265 billion in sales.Obviously, the stock has made some early investors a lot of money. But how much?
Image source: Getty Images.
The ultimate growth stock
Amazon first sold shares to the public on May 15, 1997.The initial public offering (IPO) was priced at $18 per share.There have been three stock splits,all between 1998 and 1999. Two of the splits were 2-for-1, while the other was a 3-for-1 split. The way splits work is that you receive more shares, but the stock price is adjusted accordingly so the value of your investment stays the same -- it's not free money.
So, if you invested $500 at the IPO price, you would have purchased 27 shares. You would now have 324 shares after the stock splits. Those shares would be worth $568,620 at the current price of $1,755 per share.
You wouldn't be an Amazon millionaire yet, but that's an amazing return of about 36% compounded annually, or a total return of 113,000%.
Investors who stuck with Amazon through the roller coaster ride of the dot-com bubble around 2000 would have been handsomely rewarded for their patience. The stock soared from a split-adjusted IPO price of $1.50 per share to $106.69 per share on Dec. 10, 1999.From there, it proceeded to fall 96% until it bottomed on Sept. 28, 2001, at $5.97 per share.
It's amazing to think about it, but even if you had bought Amazon shares at the peak of the tech bubble in December 1999, you would still be up more than 1,500% on that investment.It's an important lesson that investors tend to undervalue fast-growing companies with massive opportunities to expand. Just because a stock looks overvalued doesn't mean it is.
From its founding through 2001, Amazon was unprofitable and was bleeding cash as it invested heavily in marketing, technology, and fulfillment to expand.In 2002, the business became free cash flow positive and has remained so every year since.
Free cash flow has always been Bezos' preferred metric for gauging the profitability of the company. In his first letter to shareholders, Bezos stated, "When forced to choose between optimizing the appearance of our GAAP accounting and maximizing the present value of future cash flows, we'll take the cash flows."
Today, Amazon generates more than $20 billion in free cash flow.The growth of Amazon Web Services (AWS) has had a lot to do with increasing profits and free cash flow in recent years. AWS accounted for about two-thirds of the company's operating income in the third quarter of this year.
What's next?
Despite the phenomenal return of the stock, Amazon still has a very small share of the $3.5 trillion e-commerce market.There is also a lot of the world Amazon has yet to penetrate meaningfully, so the company still a lot to offer investors.
Plus, Amazon has already proved it can find new categories or areas where it's competent to provide a competitive service, like online advertising or the Internet of Things.Amazon has come such a long way in just 24 years. I wouldn't underestimate the company's potential from here.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. John Ballard owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.
FAQs
So, if you invested $500 at the IPO price, you would have purchased 27 shares. You would now have 324 shares after the stock splits. Those shares would be worth $568,620 at the current price of $1,755 per share.
How much would $1000 of Amazon stock at IPO be worth today? ›
Stock splits of Amazon in June 1998 (2:1), January 1999 (3:1), September 1999 (2:1) and June 2022 (20:1) would have turned 55.56 shares into 13,334.4 shares today. Based on a price of $175.52 for Amazon shares at the time of writing, the $1,000 investment would be worth $2,340,453.89 today.
What if I invested $100 in Amazon 10 years ago? ›
Currently, Amazon.com has a market capitalization of $1.74 trillion. Buying $100 In AMZN: If an investor had bought $100 of AMZN stock 10 years ago, it would be worth $1,038.46 today based on a price of $166.10 for AMZN at the time of writing.
How much funds would you gain by now if you had invested 1000$ in the Amazon in 1997? ›
After several stock splits, an investment of $1,000 in Amazon's IPO back in 1997 would now be worth around $2.5 million (as of July 1; at a share price of $197.2). As this chart shows, the share price has risen year-on-year.
How much was Amazon stock at IPO? ›
All told, one share of Amazon purchased right at its IPO would be 240 shares today. On a split-adjusted basis, its IPO price of $18.00 per share has been pared down to only $0.075. As of the most recent look, the stock's still trading at over $166 per share, for perspective.
What if you invested $10,000 in Amazon at IPO? ›
That means a $10,000 investment at its IPO would be worth a cool $13 million today. Even a more modest investment of $1,000 would have yielded a profit of about $1.3 million. Image source: Getty Images.
How much is $10,000 invested in Amazon 20 years ago? ›
Those gains translate to a 23.2% compound annual growth rate for Amazon compared to a 6.2% CAGR for the S&P 500 in that time. As a result, $10,000 in AMZN stock purchased 20 years ago would now be worth $645,262. A $10,000 investment in the S&P over the same period, however, would amount to $33,452.
How much is $10,000 in Apple 20 years ago? ›
That means that $10,000 in AAPL stock purchased 20 years ago would be worth more than $4.85 million today, assuming reinvested dividends.
Was Amazon stock ever $3000 a share? ›
Key Points. Amazon has soared more than 1,000% over the past decade, and the stock climbed past $3,000 prior to its last stock split. The company generates billions of dollars in earnings, thanks to its leadership in e-commerce and cloud services.
Has Amazon stock ever been $2,000? ›
Amazon shies off high after hitting $2,000 per share for the first time. It's a major milestone in the stock's climb to match Apple's $1 trillion market valuation. The record high comes a day after Amazon gained 3.2 percent, sparked by a bullish call by Morgan Stanley.
Over the last decade, Amazon's shares have appreciated 945%. That easily bested the S&P 500's 227% total return. Even starting with a relatively small $1,000 just 10 years ago, you would now have about $10,500.
How much is $10000 invested in Amazon in 1997? ›
If you had invested $10,000 in Amazon at its IPO price in 1997, you would have purchased 555 shares, not including commission expenses or fractional shares. Taking into account Amazon's four stock splits, these 555 shares would have multiplied into 133,200 shares, as of today.
What if you invested $1000 in Google 20 years ago? ›
Monday marked the 20-year anniversary of Google's IPO. The stock has appreciated over 6,500% since then. In other words, if you invested $1,000 in Google at its closing price on Aug. 19, 2004, your shares of Alphabet, now the search giant's parent, would have been worth $66,521.70 as of Monday's close.
What would $1000 in Apple stock in 1984 be worth today? ›
If you had invested $1,000 in Apple stock on Jan. 24, 1984, today, you would have $1,593,809. Likewise, if you had invested $1,000 in an index fund replicating Nasdaq, you would have $55,090. A similar $1,000 investment in an index fund that replicates the S&P 500 would be worth $29,230.
What if I bought Amazon stock in 1997? ›
Since going public in 1997, Amazon stock has generated a total percent change of roughly 182,900%, which also incorporates the various stock splits that have happened along the way. That means that if you had invested $4,000 in Amazon in 1997, you would now have roughly $7.32 million.
What if you invested $1000 in Microsoft 20 years ago? ›
Buying $1000 In MSFT: If an investor had bought $1000 of MSFT stock 20 years ago, it would be worth $16,279.07 today based on a price of $413.00 for MSFT at the time of writing.
What if I invested $1,000 in Amazon in 1997? ›
That's right, a mere $1,000 outlay in 1997 would yield investors nearly $2.5 million today (and a hefty tax bill from Uncle Sam).
How much is $10 000 invested in Amazon in 1997? ›
If you had invested $10,000 in Amazon at its IPO price in 1997, you would have purchased 555 shares, not including commission expenses or fractional shares. Taking into account Amazon's four stock splits, these 555 shares would have multiplied into 133,200 shares, as of today.
What if you invested $1,000 in Apple 20 years ago? ›
What does that look like on a brokerage statement? Check out the above chart and you'll see that if you invested $1,000 in Apple stock 20 years ago, it would today be worth almost $448,000. The same $1,000 invested in the S&P 500 would theoretically have turned into about $7,300 over the same period.
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