Status: 15/05/2022 03:51
Amazon went public in 1997 with an issue price of $ 18. Since then, the company has fundamentally changed the way people shop and made owner Bezos one of the richest men in the world.
In the months leading up to the IPO, company founder Jeff Bezos continued to tell potential investors this story:
Three years ago, when I was working for a hedge fund in New York, I came across this number: Internet usage is growing 2,300 percent annually! That’s when I decided: against the backdrop of this episode, I’m going to develop a business plan.
Presumably during a drive with his wife from New York to Seattle, where Bezos founded his Cadabra company in the summer of 1994. A name that reminded Kadaver to a fellow lawyer.
“Cadabra” became “Amazon”
Three months later, he changed his company name to Amazon. The business idea has remained the same: Internet mail order. He made the conscious decision to read books, says Bezos. There are by far the most diverse types of books on the market. Music is number two. There are 200,000 CDs available, but more than three million book titles worldwide. And 1.5 million in English alone.
Amazon.com, for example, went public on the New York Nasdaq Technology Exchange 25 years ago as the “largest bookstore in the world” – and it did well: the issue price was $ 18 – after three stock splits, that would be $ 1.50 per share today. Those who got nothing on the allocation could still make a deal at the end of the first trading day at a closing price of $ 23 – just under $ 2 adjusted for the split. For comparison: On Friday, Amazon stock closed at $ 2,263. And this despite the fact that the price has dropped 40 percent since the summer.
Understood the market better than others
“I think at the time I would have at least considered buying Amazon. Although I have to admit that I did not anticipate the price would increase by 2,500 percent,” says Arun Sundararajan, a technology expert at New York University had a dealing with the Amazon phenomenon for years. But Amazon was already a company that understood online trading better than others, even at the time of the IPO, according to Sundararaja.
In his view, unlike its competitors, Amazon understood one thing: “If you don’t deliver your Christmas presents on time, you’ve lost all confidence.” At Christmas 1998 and 1999, Amazon was the only online retailer whose site hadn’t collapsed, Sundararaja continues. Amazon had the ability to cover the huge demand and built the logistics infrastructure to deliver Christmas gifts on time, which was good for customers, but not for shareholders initially.
Instead of distributing profits, Besoz has invested heavily. The online bookstore has become an online marketplace for anything you can imagine. With Kindle, Amazon set the standard for e-books covering 80% of the US market. The highly profitable Amazon web service offers cloud services around the world.
A strategy that changed the world
Over time, the question has repeatedly arisen as to whether Amazon is doing it right, continuing to grow instead of skimming profits, Sundararaja says. But with this strategy, Amazon has changed the entire buying behavior more than any other company in the Western world and is responsible for the fact that shopping online is so common today.
This and the fact that large-scale online retailers are less dependent on trends and developments than Facebook or Twitter, for example, makes Sundararajan confident that Amazon will continue to be successful 50 years after the IPO. When I look at the top five tech companies – Microsoft, Amazon, Apple, Google, and Facebook – he thinks Amazon is more likely to be in about 25 years and dominate the market.
Issue price $ 18 – Amazon listed on the New York Stock Exchange 25 years ago
Peter Mücke, ARD New York, May 14, 2022 3:20 pm