When did Amazon go public? What is this Amazon about?

When did Amazon go public? Amazon’s (AMZN -0.16%) stock was listed in May 1997, so this year marked its 25th anniversary as a publicly traded company. It was a pioneer of online sales back then, and although e-commerce still remains central to its business, it has expanded into other markets to become one of the largest companies in the world.

As we come to the close of 2022, Amazon stock is down by 50% year to date amid the broad sell-off in the technology sector, but any investor who bought the stock at its initial public offering (IPO) and held on is still sitting on astronomical gains.

Let’s look at exactly how much they’ve been rewarded so far and consider where Amazon stock might go next.

Amazon go public

When did Amazon go public?

That just about sums up the list of the core businesses that contribute meaningful revenue to the organization. But it doesn’t capture other emerging areas Amazon has stepped into. One is electric vehicle manufacturing, through its stake in up-and-coming producer Rivian Automotive. Amazon was initially a Rivian customer before deciding it would be fruitful to own a slice of one of the fast-growing electric vehicle industry’s upstarts.

The point is Amazon’s market valuation has exceeded $1.7 trillion in the past, and that doesn’t happen at a company that doesn’t possess an insatiable appetite for growth and expansion.

E-commerce still provides 84% of the company’s total revenue. Coming in second is Amazon Web Services (AWS), which now leads the entire cloud computing industry by sales and scope of solutions. The cloud is an increasingly important technology because it allows businesses to migrate their operations and their touchpoints with customers online. Whether those businesses need simple file storage or advanced artificial intelligence tools, AWS has them covered, and this could be a $1.5 trillion annual opportunity by the end of the decade.

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During 2021, Amazon began reporting advertising revenue as a standalone line item (it used to be rolled into the e-commerce category). It turns out the ad segment is a financial powerhouse, generating $35.8 billion in sales over the last four quarters, which was even more revenue than was generated by Alphabet’s YouTube — the largest video-streaming platform in the world.

Amazon’s flagship e-commerce website gets 2.6 billion hits per month, so it’s an advertiser’s dream if they’re trying to market a product to consumers. But the company has several other potential opportunities to bring in more ad dollars. For example, its Prime video-streaming service has entered the world of live sports by acquiring the rights to the NFL’s Thursday Night Football. Over time, advertising could become a powerful revenue driver for Amazon, especially since it logged a whopping 30% year-over-year growth in the third quarter alone.

Amazon’s having a tough year, but focus on the long run

Since Amazon derives most of its revenue from consumers, it’s suffering due to this year’s high inflation and rising interest rates, which have left household finances tight. Amazon’s total revenue is expected to come in at $510 billion this year, which would amount to growth of just 8.6%.

But there is some good news. Consumer Price Index data from the past half year suggests that U.S. inflation peaked in June, so 2023 could be far more favorable for the e-commerce industry.

Nonetheless, investors should really focus on the long term. The chart below makes that clear — Amazon’s revenue came in at just $147 million in 1997, the year it went public, and its run of growth since then has been remarkable.

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Amazon go public

Here’s how much a $10,000 investment in Amazon’s IPO would be worth now

On May 15, 1997, Amazon went public for $18 per share. Over the course of the last 25 years, management has elected to conduct several stock splits to shrink its soaring share price. This helped smaller investors retain the ability to buy into the company before fractional share buying became more or less ubiquitous. Below is a list of those splits:

  • 2-for-1 split on June 2, 1998;
  • 3-for-1 split on Jan. 5, 1999;
  • 2-for-1 split on Sept. 1, 1999;
  • 20-for-1 split on June 3, 2022.

Factor those splits in, and Amazon’s IPO price of $18 per share would be adjusted to $0.075 per share. With Amazon closing trading Wednesday at $86.77 per share, those early investors would be sitting on a mind-boggling gain of 115,933%.

What does that mean in dollar terms? An investment of $10,000 at Amazon’s IPO would be worth a whopping $11.5 million today.

That amounts to compound annual growth of 31.7%, which is five times greater than the compound annual return of the benchmark S&P 500 index over the same period. In layman’s terms, on average, Amazon’s market value growth was five times the overall market’s growth each year for the last 25 years!

Could Amazon stock continue to outperform the market over the next decade (and beyond)? It’s likely because the company has its fingers in so many transformative industries, and it’s still expanding. With the stock down 49% in 2022, this might be an excellent opportunity to buy for the long run.

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Should you invest $1,000 in Amazon right now?

Before you consider Amazon, you’ll want to hear this.

The Motley Fool Stock Advisor analyst team just revealed what they believe are the 10 best stocks for investors to buy right now… and Amazon wasn’t one of them.

Stock Advisor is the online investing service that has beaten the stock market by 3x since 2002*. And right now, they think there are 10 stocks that are better buys.

Amazon shares and the dot-com crisis

The early years of trading were challenging, due to the dot-com crash which saw AMZN stock lose 90% of its value in two years. Following the crisis, the company’s stock didn’t reach its pre-crash heights as investors continued to fear the lack of long-term profitability – up until 2001, Amazon hadn’t made any profit.

But Bezos was aggressive in his expansion plans following the bubble bursting. He was determined to expand the company’s offering by creating the likes of Amazon Prime, Amazon Web Services and the Kindle.

Amazon shares and the 2008 financial crisis

Following the 2008 financial crisis, quantitative easing programmes provided investors with capital to reinvest in the US stock market, and Amazon was a big recipient of these capital waves thanks to the growing retail offerings and uptick in its consumer base.

Ten years after the crash, in September 2018, Amazon became the second company ever to hit a valuation of $1 trillion – just two months behind Apple.

Amazon shares and the Covid-19 pandemic

During the coronavirus pandemic, while many other companies’ shares were hit by falling revenues, Amazon saw a huge surge in sales due to lockdown measures causing a rise in online shopping. Amazon saw increases across the board, especially in its grocery delivery service. Amazon stock hit its all-time high of $3,531.45 on September 02, 2020.

Amazon go public

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