THREAD: I have heard about $AMZN’s stock performance during the DotCom bubble so many times, and I wasn’t around professionally then, so I decided to investigate the stock and #s during that time (not the biz strategy, a lot of great books on this).

If you had held AMZN shares at the PEAK of the 2000 bubble, you would have lost over 90% of its value ($107 in 9/1999 ->$6 on 9/2001), but could have compounded 18% annually to today. Had you bought at the lows, you could have compounded 39%.

Conclusion: Even if you thought AMZN was a NEVERSELL stock, at the peak it was a crazy valuation at 14X ntm revs for a business where end game op margins weren’t clear. I don’t know what I would have done, but I definitely would have thought hard about trimming/selling often.

Note, ex-IPO, share prices are denoted in TODAY’s stock split adj price. AMZN split 3 times: 1) 6/2/98 2:1; 2) 1/5/99 3:1; 3) 9/2/1999 2:1. Effectively If you bought 100 shares at IPO, by the end of 1999, you’d have 1,200 shares. So the IPO price of $18 = $1.5 today

AMZN IPOd on 5/15/97 at $18/sh raising $54mn (before fees) at a total market cap of ~$440mn. AMZN’s stock did NOT pop the first day. And actually fell in the first week (add it to the list of great companies along with FB, BABA).
Great commentary from 2 people who were there:

Back then the story was different. The opening line was relatively modest. “ http://Amazon.com  is the leading online retailer of books.” Brief mention of CDs, videotapes and audiotapes. https://www.sec.gov/Archives/edgar/data/1018724/0000891020-97-000868.txt

Compare this to Google’s S-1 which made a much bigger statement. “Google is a global technology leader focused on improving the ways people connect with information.”

At the time of the IPO. AMZN had ttm revenues of ~$31mn but was growing 100% q/q (~$8mn -> $16mn)! In 1995, it reported <$1mn in revenues. GPM%s were 22% and OPMs were -19% in the most recent Q, 1Q97.

AMZN would go on to grow revenues in 1997 at 840% y/y, 312% in 1998, 170% y/y in 1999. In 1999, margins and FCF would also take a hit. OPM% went from -10% in 1998 to -36% in 1999. And FCF went from breakeven in 1998 to a cash burn of ~$400mn in 1999. On a base of $1.6bn in revs!

AMZN peaked on 12/10/1999 at ~$106. It fell 30% by YE. And it would stay there until the broader market peaked on 3/9/2000. At its Dotcom peak, AMZN was valued at ~$35bn. But how big was that vs. the numbers? At the end of 1999, AMZN was forecasted to grow 60% to $2.5bn

in revenue, or 14X revenues (this compares to W today at ~1.8X ntm and a public market range of 0.6X-2X). BUT 60% growth was a slowdown from 170% in 1999 AND net margins were going to go from -40% to -50%! Some people questioned if this was real business.

Note today, AMZN trades at 3.9X ntm Sales, BUT I’d argue ex AWS, it’s more like 1.5X sales.

AMZN bottomed on 9/28/01 at $5.97, effectively $2bn in market cap. Revenue growth slowed in 2001 to 13% y/y (flat y/y in 3Q 2001), but AMZN improved margins dramatically (Net margins went from -50% in 2000 to -18% in 2001 to almost breakeven in 2002).

AMZN was forecasted to report $4bn in revenue in 2022, growth of 25% with improving margins. So, at the lows, effectively AMZN was trading at 0.5X ntm revenues.

Other Fun Facts - AMAZINGLY, in the beginning of 1999, AMZN pulled back from $92 on 1/11 to $44.75 on 2/8. A 50% drop in ~1month during a period when the NASDAQ was up!