Buying $10,000 in shares of Amazon when it debuted 25 years ago would have made you wildly rich.
You probably don’t need me to tell you this, but 2022 has been an awful year for Wall Street. The S&P 500, which is viewed as the most encompassing of the major U.S. indexes, produced its worst first-half return since 1970. Meanwhile, the Nasdaq Composite has shed as much as a third of its value, which easily pushed it into bear market territory.
But it’s not all bad news. Even though things appear dire for the stock market right now, history has shown that every bear market decline and correction throughout history is a buying opportunity. When given enough time, every notable decline has eventually been cleared away by a bull market.
Of course, owning great companies helps build wealth, too. Just ask shareholders of e-commerce giant Amazon (AMZN -1.80%).
$10,000 invested in Amazon on its debut day is worth a staggering amount of money today
When Amazon went public on May 15, 1997, the benchmark S&P 500 closed at 841.88. Not counting dividends, the index has since gained 360%. Inclusive of dividends, the total return of the widely followed S&P 500 jumped to 636%, as of this past weekend.
That’s an average annual total return of better than 8% for the past quarter of a century. But to Amazon shareholders, it’s peanuts.
Since Amazon’s initial public offering (IPO) at $18 per share on May 15, 1997, the company that Jeff Bezos founded has undergone four stock splits:
- A 2-for-1 split on June 2, 1998
- A 3-for-1 split on Jan. 5, 1999
- A 2-for-1 split on Sept. 1, 1999
- A 20-for-1 split on June 3, 2022
This means the original IPO cost basis, if held for the past 25-plus years, would be just $0.075 today. It also means that patience would have paid off immensely for Amazon’s original stakeholders.
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.
With Amazon ending the previous week at $123.53, it means a $10,000 investment a little over 25 years ago would now be worth (get this…) $16,454,196. For those of you keeping score at home, we’re talking about an aggregate return of 164,607%, or an average annual return of around 34% for a quarter of a century.
Since Amazon’s initial public offering (IPO) at $18 per share on May 15, 1997, the company that Jeff Bezos founded has undergone four stock splits:
- A 2-for-1 split on June 2, 1998
- A 3-for-1 split on Jan. 5, 1999
- A 2-for-1 split on Sept. 1, 1999
- A 20-for-1 split on June 3, 2022
This means the original IPO cost basis, if held for the past 25-plus years, would be just $0.075 today. It also means that patience would have paid off immensely for Amazon’s original stakeholders.
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.
With Amazon ending the previous week at $123.53, it means a $10,000 investment a little over 25 years ago would now be worth (get this…) $16,454,196. For those of you keeping score at home, we’re talking about an aggregate return of 164,607%, or an average annual return of around 34% for a quarter of a century.
