Amazon's Stock IPO and Fun Facts
Amazon, Inc.'s initial public offering (IPO) was on May 15, 1997 at $16.00 per share. Since that time Amazon's stock has split 3 times. In 1998, it had a 2 for 1 stock split, while in 1999 Amazon's stock had a 2 for 1 and a 3 for 1 stock split. So basically for every share purchased at the IPO a person would have 12 shares today. So let's say you invested $5,000 dollars in Amazon's IPO. Assuming you could buy fractional shares you would have purchased 312.5 shares of Amazon stock at the IPO price of $16.00. The 312.5 shares purchased at Amazon's IPO would have turned into 3750 shares today. Based on the December 31th, 2018 closing price of $1501.97, the original $5,000 investment in Amazon's IPO would be worth $5,632,387.50 today.
Surprisingly, Jeff Bezos (Amazon's founder and current CEO) still owns over 16% of the total outstanding shares. Based on Amazon's most recent filings, Jeff Bezos owned around 79 million shares of the 491 million shares outstanding of Amazon, Inc. This is very remarkable when you consider Amazon had 256 employees at the time of its IPO and now it has over 647,500 employees. Based on its last 12 months of sales, Amazon generated 177.87 billion in revenue from those 647,500 employees. That equates to $359,675.68 in revenue per employee. For comparison purposes, Apple generates over $2.6 million in revenue per employee.
However, revenue generation has never been the question about Amazon. On the contrary, sustained profitability and growth of those profits has always been in question. Thus far, investors have been content to watch revenue grow, with the hopes that Amazon will eventually generate more profits from all that revenue. To put the numbers in perspective, Amazon trades at a trailing PE ratio of 84 and a forward PE ratio of 43 while Apple trades at trailing PE ratio of around 15 and a forward PE ratio of under 14. Another way to look at this is that investors or traders in Amazon are willing to pay 3 times as much for Amazon's future earnings as they are for Apple's future earnings.
Time will tell whether Amazon's earnings eventually grow into its stock price or if its stock price changes to reflect lower earnings. As long as investors and traders continue to look with optimism about Amazon's future, I wouldn't bet against this stock. Many have tried in the past, only to be burned by Amazon's hefty stock appreciation. Thanks for visiting 1Stock1.com.