Published on 22.03.2024

Amazon Stock

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Amazon stock price

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Amazon's IPO

On May 15, 1997, Amazon was listed on the American technology exchange Nasdaq under the ticker AMZN. There was considerable interest in the rapidly growing online bookstore. The underwriting banks initially set the offering price within a range of $12-$14 per share, but due to strong demand, this was later increased to $14-$16. Ultimately, the issuance price was set at $18 per share.

The IPO raised $54 million for Amazon and gave the company a market capitalisation of $438 million. This was despite the fact that the company had only generated $15.75 million in revenue and incurred a loss of $5.78 million in 1996. Investing in Amazon proved to be extremely lucrative. The company's unprecedented expansion has propelled its market value to over $1.3 trillion, as of August 2023.

Amazon’s business strategy and future

Amazon's e-commerce division's revenue reached a record level amid the Covid-19 crisis. However, the company currently earns more from cloud services, Prime subscriptions and advertising. Therefore, its CEO, Andy Jassy, is directing Amazon to focus on cloud computing and other services.

At the same time, he continuously faces the challenge of keeping both the web shop’s customers and external sellers satisfied. External parties selling their products on the platform complain about the high commissions Amazon charges on each purchase. Additionally, the quality of the products is not always up to standard. The CEO also needs to retain staff as employee turnover is high and the media frequently reports on the extreme workload in distribution centres.

Amazon is also under scrutiny from politicians in Washington and Brussels over alleged abuse of power and their data. Multiple antitrust investigations are ongoing against the company. Jassy will want to avoid the company being broken up.

History of Amazon

In 1994, hardly anyone had heard of the internet, but the rapid growth of the worldwide web caught the attention of Jeff Bezos. After studying various product categories, including CDs, videos and software, Bezos decided to sell books online. This was due to the significant global demand for literature, the low cost of books and the large number of available titles.

Amazon was founded in the garage of Bezos's rented house in Bellevue, Washington. His parents provided him with a starting capital of nearly $250,000 to realize his idea. In July 1995, Amazon sold 'Fluid Concepts and Creative Analogies' as its first book. Soon, Amazon expanded its product range to include numerous other items. In the early years, there were doubts about whether Amazon would succeed if traditional retail chains also ventured online. However, Bezos proved the sceptics wrong. Physical stores struggled when Amazon entered the sector.

Meanwhile, Amazon has grown into a global e-commerce platform with millions of products. In addition, it includes supermarket chain Whole Foods, video streaming service Amazon Prime Video and Amazon Web Services (AWS). The cloud service AWS was founded in 2003 and is currently a crucial pillar of Amazon. It has an annual revenue of approximately $59 billion and generates the highest profit margin among all Amazon segments. Major companies such as McDonald's, Volkswagen and Airbnb are their customers.

Jeff Bezos is no longer involved in the day-to-day management of Amazon. On July 3, 2021, Andy Jassy, who previously led the AWS division, succeeded him as CEO. Bezos remains active as a supervisor, serving as the Executive Chair of the board.

Amazon's dividend

Amazon currently does not pay dividends. All profits are reinvested in the company's reserves to support further growth.

The information in this article is not written for advisory purposes, nor does it intend to recommend any investments. Please be aware that facts may have changed since the article was originally written. Investing involves risks (e.g price volatility, currency or liquidity risk). You can lose your invested funds. Consider your knowledge and experience when making investment decisions. Past performance is not a reliable indicator of future results. Markets are volatile and can fluctuate significantly due to economic, political, regulatory, or other developments.

Sources: Amazon, TechCrunch, Barcharts, Yahoo Finance

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