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According to Forbes, Amazon founder Jeff Bezos is worth just shy of $200 billion — more than Elon Musk, Mark Zuckerberg, Warren Buffett and the rest of the 12-figure club.
If you’re the head of a publicly traded company, you don’t become a perennial contender for the title of the richest person in the world by not keeping shareholders happy — and Bezos has a horizontal skyscraper for a yacht because he’s spent years turning modest investments into gargantuan gains for investors large and small.
Amazon (AMZN) is one of the great success stories of 21st-century capitalism, and it’s hard not to wonder what your net worth would be today if you had socked a thousand bucks into the world’s largest online retailer 10 years ago. You might not like the answer, but read on to find out anyway.
A $1,000 Investment a Decade Ago Would Give You Another Zero Today
Amazon stock is currently trading at roughly $172 per share. Around the same time 10 years ago in late April 2014, it was trading at about $16.50.
According to Zacks Equity Research, a $1,000 investment in mid-March 2014 would have been worth $9,565.47 in the middle of last month for a gain of 856.55%. Amazon doesn’t pay a dividend, so you wouldn’t have had an opportunity to collect passive income or reinvest distributions to accelerate your returns.
Since shares were a little more expensive in March 2014 than they were one month later in April, a $1,000 investment exactly 10 years ago would have increased your money tenfold — to roughly $10,000.
By comparison, the S&P 500 rose just 179.75% and gold gained 50.53% over the same period.
Stock Splits: Amazon Wasn’t Always Trading in the Triple Digits
On June 6, 2022, Amazon issued a 20-to-1 stock split, which means that existing shareholders received 20 shares for every one they held, with the new shares worth one-twentieth of their previous value. It was the fourth such split, with the other three taking place in the late 1990s.
Amazon shares had been trading at $2,495.80 at the time of the 2022 split, which slashed the price to $124.79 per share.
The split had no impact on the value of an investment in the company. It was the equivalent of Amazon giving shareholders 20 $1 bills for a $20 bill. Or, in a neat analogy from Forbes, “Cutting one pizza pie into 20 slices doesn’t create more pizza.”
Amazon: Proof of Why It Pays To Buy and Hold
Many of those who did invest in Amazon in 2014 encountered stormy seas and were likely tempted to cut their losses or, depending on their tax strategy, harvest them several times shortly after anteing up.
According to 24/7 Wall Street, “If you’d bought in March 2014 you’d have seen shares decline over 20% (multiple times)… That $1,000 investment wouldn’t have recovered back to the initial value until almost a year later.”
And losses weren’t limited to the year following March 2014. Amazon shareholders endured stomach-churning ups and downs for years. In the fall and winter of 2018, the price dropped from roughly $98 to less than $74. COVID — and the mass shuttering of physical stores — was good to Amazon, which zigged and zagged its way up to $179 — roughly the same as today — in July 2021 before cratering to $84 in December 2022 and then working its way back up to its current price.
Is Amazon Still a Good Investment?
Amazon has had a strong 2024 so far, starting the year at just under $150 and gaining nearly 20% year to date. According to Investor’s Business Daily (IBD), the gains were the market’s response to the company’s stellar earnings report from the fourth quarter of 2023. It will release its Q1 2024 report on Tuesday, April 30.
So is Amazon still a good buy, and will those who sit on the sidelines today be left wishing they had put money down 10 years from today in April 2034?
While no one can predict the future, IBD reports that Amazon sales are projected to grow by 12% year over year. Furthermore, Amazon’s advertising — the company’s fastest-growing division — is expected to grow by 23.5% year over year to $11.74 billion.
The outlook is optimistic and it appears very likely that Amazon’s best days are still ahead, with IBD writing, “Jefferies analyst Brent Thill recently raised his price target for Amazon stock to 225, from 190, and reiterated a buy rating.”
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