What Investors Can Learn from Amazon’s Patience

By Finance 2 minutes
  • 1
  • March 11, 2014

Disclosure: I have no positions in any of the stocks mentioned, but may initiate a long position in the 72 hours following publication.

Amazon has all of the potential to be the first major dot com company to survive for over 100 years. And although recently it’s starting to appear that they’re spreading themselves a bit too thin, there’s no question that they are constantly on the lookout for ways in which to innovate.

This stems from the incredible amount of patience in CEO Jeff Bezos. He doesn’t worry about the stock price, he consistently decides to reinvest the company’s profits into existing businesses, and he pushes his team to explore the potential of new ones. He’s in it for the long-run, not for a quick buck.

And the time of writing, Amazon has grown to a staggering market cap of $170 billion and, for as long as I can remember, it has been the go-to name in e-commerce.

So I took a look at the market cap of Amazon from the day it IPO’d to get a sense of how far this company has come.

It turns out that Amazon IPO’d at a market cap of just $438 million in May of 1997. And while this is telling of how much larger most press-worthy IPOs have become in recent years (Google: $35.4B, Facebook: $81.2B), it also shows the incredible benefits of being a patient investor.

Over the course of 17 years, Amazon (AMZN) increased in value by 38,712.79%.

In other words, if you had invested $10,000 in Amazon in May of 1997, it would be worth $3.9 million today.

The company has exploded to this size largely due to its team’s incredible mindset in long-term investing, and anyone who was patient enough could have gone along for the ride.

Update: As of April 2017, the $10,000 investment would be worth $6 million dollars.