Everyone loves such headlines and I didnot deny myself the pleasure of using it. Especially when it comes to real success stories. Which demonstrate how the stock market allows, after years, to make the inhabitants of the state, without any gestures on their part.
May 15, 2017 marks exactly 20 years since Amazon shares became available for purchase. All that was required of investors was to acquire them and … forget about their existence.
Companies that go public often blamed for giving investors too high expectations. Especially with this, companies that went to IPO on the threshold of 2000 sinned. However, there was one such company that not
And this is Amazon
Today it is not just an online store, but a powerful technology and service leader who has become a thing in himself and has begun a stunning process of total destruction of the entire retail trading market.
«Amazon is committed to using the latest technology to provide the best service and intends to achieve significant results in the field of online trading.»
It was this promise the company made in the prospectus for investors before the IPO, which is still available in SEC archive for review.
At that time, back in 1997, online trading was just emerging. It was a novelty and a vague promise. Today, Amazon is a giant, a destroyer of traditional foundations and the death of the retail market.
Amazon shares speak for themselves:
only fulfilled — but exceeded its promises.
At one time they could be bought for $ 18 apiece. Since then, Amazon has issued, on average, 40% of total annual income.
Hence our headline. Buy you shares for $ 100 at the time Amazon entered the stock exchange, now they would be worth $ 64,000. Each $ 1,000 would bring $ 640,000, each $ 10,000 would be $ 6,400,000, and so on.
A young 20-year-old who invested $ 500 in AMZN and forgot about them would have received one-third of a million dollars of capital by his 40s, doing nothing at all, remaining just a long-term investor.
Since the release of the shares, by the way, there were three splits — and therefore 1 share received at the IPO, then turned into 12 shares now.
Amazon Split Share
Split — the division of shares — occurs when a company decides to issue additional shares for its investors, taking into account those shares that they already own. Split 2: 1 means that investors receive 1 share per existing one. Accordingly, you had 100 shares, and it became 200. Usually they are divided by the ratio of 2: 1 and 3: 1.
When splitting, the price decreases by the same value. There are 2 times more shares, 2 times less price, therefore, the total cost remains unchanged.
Why is this needed? Split is often made so that the share price does not remain too high and thus attracts new investors. Their liquidity also increases in the same way, because the number of shares becomes trite.
Amazon conducted three splits — in 1998 and twice in 1999. At first it was 2: 1, then 3: 1 in January and 2: 1 eight months later. Consequently, one share bought in 1997 turned into 12 shares three years later.
The Best IPO in the USA
Since the public offering of shares (which is the IPO), Amazon has shown better results among all, if we take since 1995. Number one as a company that after an IPO has achieved maximum results.
For comparison, Netflix ranks 4th in this ranking, Yahoo ranks seventh, and the total revenue from the S & P 500 was about 300% over the same period.
The company had times that you would not wish the enemy. Initially, stocks in the wake of euphoria scattered like hot cakes. Then, in the collapse of 2000, taking into account the split, the price dropped from $ 113 in December 1999 to … $ 5.51 in October 2001. I wonder how many were disappointed then? And how many, on the contrary, bought up?
Analysts love AMZN. The price drop on April 28, as the story suggests in the Bloomberg terminal, only led to the fact that there were 0 recommendations for sale, 8 for retention and 40 … for purchase. Analysts, as we know, were right.