The company went public on this day 20 years ago as an unprofitable online bookstore that was just three years old.
Many investors did not foresee that it would gain about 50,000% in the two decades after its initial public offering (IPO). $US1,000 invested at the closing price on Amazon’s IPO day would be worth over $US491,000, based on the stock’s price in early trading on Monday.
That kind of return escaped even investors as seasoned as Warren Buffett, the Berkshire Hathaway CEO who recently said he was “too dumb to realise what was going to happen.” Amazon’s cloud-computing business has driven its growth and profitability while its core retail business is threatening brands that were around long before.
It would have taken a rare kind of discipline to stick with the stock through its downturns. Shares have dropped by more than 10% and an average of 36% from their intra-year peak in all of the last 20 years, Michael Batnick, the director of research at Ritholtz Wealth Management, said in a January note.
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