Everyone hears about the billionaires who got rich from their technology companies, but what about the little investor who only had $1,000 to invest? Here is what would have happened if you hitched your investment horses to these tech company’s stocks to go for the ride based on the IPO prices of some of the largest and most interesting tech companies in the world.
Forbes reported that Alibaba had the largest IPO in U.S. history when the shares began trading for the IPO price of $68 per share on Sept. 19, 2014. The company raised $21.8 billion with a market cap that valued the company at $231 billion. At that time, that amount was more than the value of Amazon and eBay combined.
A $1,000 investment in IPO shares is now worth around $2,824 at the current share price of $192 per share (July 7, 2018). This represents a return of 282 percent over the past four years or an average of around 71 percent per year.
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Investopedia says that Facebook had its IPO on May 18, 2012. The initial share price was $38 per share. On Sept. 4, 2012, the share price crashed down to $17.55. If you held on and did not sell, you would have needed to wait until July 31, 2013, for the shares to return to the IPO price. The Facebook share price has been on a roller coaster ride ever since.
A $1,000 investment in IPO shares is now worth around $5,278 at the current share price of $203 per share (July 7, 2018). This represents a return of 527 percent over the past six years or an average of around 88 percent per year.
Investopedia reports Tesla its IPO on June 29, 2010. The share price for this electric car company debuted at $17 per share. There have been no stock splits. A $1,000 investment in IPO shares is now worth around $17,916 at the current share price of $309 per share (July 7, 2018). This represents a return of 1,791 percent over the past eight years or an average of around 224 percent per year.
Google (now Alphabet)
Google is now owned by its parent company, Alphabet. CNBC reports that Google went public with an IPO on Aug. 19, 2004. The share price was $85 per share. There was a two-for-one share split during 2012. Those Class A shares in Alphabet now trade on a split-adjusted basis at around $1,155 per share (July 6, 2018).
$1,000 of Google shares bought at the IPO price of $85 per share is worth over $40,000 today at the current share price of around $1,155 per share. That is a 4,000 percent return over the past 14 years or an average of around 285 percent per year.
Investopedia reports that Apple’s IPO was on Dec. 12, 1980. The initial share price was $22 per share. A $1,000 investment in IPO shares is now worth around $491,000 at the current share price of $188 per share (July 7, 2018). This represents a return of 49,100 percent over the past thirty-eight years or an average of around 1,292 percent per year.
...and the winner is...
The Motley Fool says Amazon went public with its IPO on May 15, 1997, at the height of the tech boom. At the time, it was an online bookseller and not profitable. At $18 per share, Amazon was able to raise $54 million, which gave the company a value of $438 million.
After the IPO, Jeff Bezos continued to raise as much money as possible to build out the company telling investors that the long-term profit would be worth waiting for. For many years, the expansion of the company was going so fast that profits could not keep up with expenses. Many wondered if Amazon would ever be profitable. With all the money raised by Bezos, Amazon was able to weather the technology stock bubble burst in 2001. Although the share price fell to $5.67 per share during that time, Amazon went on to become one of the most successful and profitable companies in the world.
Investors, who bought shares in Amazon during its IPO and held on to them, went along for a wild ride. They benefited from 12 stock splits. However, they had to watch the company lose over half its share value during three different bleak periods and then wait patiently for up to three years later to see it rise up again.
As Investopedia reported, because of the stock splits, $1,000 of Amazon shares bought at the IPO price of $18 per share is now worth over $1,133,000 at the current share price of around $1,700 per share (July 6, 2018). This represents a return of 113,300 percent or an average annual return of around 5,395 percent per year.
Now, don’t you wish that you invested in these IPOs and let the money ride instead of putting it in a bank for a few measly percentage annual returns on bank CDs? However, as they say, hindsight is 20/20 because Amazon could have blown up when the tech bubble burst like so many other companies that no longer exist.
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