Amazon has long been based in Seattle. In it unveiled plans for a "second headquarters" in Arlington, Virginia, which is slated to open in Bezos remains as executive chair. Amazon is grouped with consumer discretionary stocks for investing purposes, though it is also included in many mutual and exchange-traded funds focused on the technology sector in recognition of Amazon Web Services' AWS status as is a leading cloud computing provider.
The company's main competitors include brick-and-mortar retailers like Walmart Inc. WMT , the e-commerce platform operator eBay Inc. On April 1, , workers at Amazon's JFK8 warehouse in Staten Island, New York, elected the recently formed Amazon Labor Union to represent them in collective bargaining , the first successful unionization effort at an Amazon facility. On April 18, , an administrative law judge ruled Amazon illegally fired an Amazon Labor Union from his job at the Staten Island warehouse in in retaliation for protected organizing activities.
On April 25, , workers at a second Amazon warehouse in Staten Island began voting on union representation. However, the effort to unionize the Staten Island warehouse failed, with employees voting against joining the union and for, according to results released by National Labor Board announced on May 2, In mid-July , the U. The products included 24, faulty carbon monoxide detectors, , hair dryers sold without the required immersion protection devices to guard against electrocution risk, and an unspecified number of children's sleepwear garments that failed to meet mandated flammability standards.
While Amazon removed some of the hazardous product listings, notified purchasers they presented a hazard and offered a refund in the form of an Amazon gift card, it failed to comply with all the requirements the CPSC imposes on product distributors, including issuing an agency-approved recall notice specifying the hazards, tracking product returns and documenting the destruction of hazardous products, Amazon contended it was a third-party logistics supplier exempted from CPSC distributor rules.
On, Jan. On March 18, , the a U. Superior Cout judge dismissed an antitrust suit filed against Amazon by the attorney general for the District of Columbia, ruling the suit failed to show that Amazon's agreements with third-party merchants obligating them to price their products on Amazon no higher then they do elsewhere serves to increase consumer prices.
On April 13, , the attorney general for the District of Columbia sought reconsideration of the ruling, arguing the agreements allow Amazon to charge higher fees for third-party listings than other online marketplaces, because merchants can't pass on the lower listings fees to consumers. On March 11, , a U. The Federal Trade Commission FTC , which closely scrutinized the deal, reportedly did not attempt to block it because its four commissioners were split along party lines on the matter.
Amazon has split its stock three times, all in its first three years as a public company, as follows:. Conditioned on shareholder approval at the company's May 25, annual meeting, Amazon will split its stock at for-1 ratio on June 3, , with shares trading on a split-adjusted basis from June 6.
As of Jan. Andy Jassy, who succeeded founder Jeff Bezos on July 5, Jassy is also a member of the board of directors, where Bezos is executive chair. Jassy founded AWS, Amazon's highly profitable and fast-growing cloud computing platform.
Jassy has been with Amazon since In , the Amazon held its Prime Day event June , offering discounts on more than 2 million product items. Securities and Exchange Commission. Office of the Attorney General of the District of Columbia. National Labor Relations Board.
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There have been three stock splits , all between and Two of the splits were 2-for-1, while the other was a 3-for-1 split. The way splits work is that you receive more shares, but the stock price is adjusted accordingly so the value of your investment stays the same -- it's not free money.
You would now have shares after the stock splits. Investors who stuck with Amazon through the roller coaster ride of the dot-com bubble around would have been handsomely rewarded for their patience. It's an important lesson that investors tend to undervalue fast-growing companies with massive opportunities to expand. Just because a stock looks overvalued doesn't mean it is.
From its founding through , Amazon was unprofitable and was bleeding cash as it invested heavily in marketing, technology, and fulfillment to expand. In , the business became free cash flow positive and has remained so every year since. Free cash flow has always been Bezos' preferred metric for gauging the profitability of the company. In his first letter to shareholders, Bezos stated, "When forced to choose between optimizing the appearance of our GAAP accounting and maximizing the present value of future cash flows, we'll take the cash flows.
AWS accounted for about two-thirds of the company's operating income in the third quarter of this year. There is also a lot of the world Amazon has yet to penetrate meaningfully, so the company still a lot to offer investors. Plus, Amazon has already proved it can find new categories or areas where it's competent to provide a competitive service, like online advertising or the Internet of Things. Amazon has come such a long way in just 24 years.
I wouldn't underestimate the company's potential from here. Cost basis and return based on previous market day close. Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of Discounted offers are only available to new members. Calculated by Time-Weighted Return since Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.
Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. Premium Services. So, one of the biggest things that people who have studied Amazon look at now and is quite well known, is their ability to spin the flywheel, to add fuel at any given point and increased the momentum of other parts of the businesses in a very almost perpetual motion way.
So that superior selection drives a better customer experience which increases more traffic, which brings more sellers to marketplace and on and on and on. David: Which lowers prices and increases selection. Ben: It is. This early in the company before the IPO, was this something that was frequently talked about?
Tom: So the actual flywheel concept developed in like or rose out of a board meeting and meeting with an outside consultant. But some of the basis of that, I mean, Jeff from the very beginning was very focused on customer experience. When we launched, it was a black and white website.
But nonetheless, it was like it was genetic, that customer experience. And then so how do you do that? Well, prices, inventory. So it was in the background certainly and focused some of those elements. The flywheel metaphor became useful later, I think. David: Hearing you talk about that, one — as long-time listeners of this show know, we are great admirers of Ben Thompson and his Aggregation Theory.
Really interesting to hear that even in those early days when the internet was so poorly understood by so many people, Jeff got that at his core that providing the superior customer experience would lead to winning the market. Tom: And not all companies get that. Partly, yeah, they will squeeze another two cents out of the customer. We cut out this product and we saved money.
But then for the first couple of months, it actually trades down. What was it like in those first couple of months after the company went public and the stock traded down? David: Yup. And then the stocks split multiple times after that. There were moments when you could have bought in good prices and everybody, you know — it shows partly that the market is not perfect at valuation but on the other hand, the country was in a recession by and —.
Tom: And it was losing a lot of money. Many people were predicting even then that was going to die. Ben: Oh yeah, I bet. One of the things we talk about a lot on this show is we try to assess whether an acquisition or an IPO was a good move and how successful was it. One of the measures that we use for that with IPOs is what going public enabled that company to do that they would not otherwise have been able to do. So, what in the kind of near-term those next few years after the IPO did they plough that new influx of capital into?
Tom: I think Amazon has been rightly known for not making any money and being willing to invest and to the extent that the financial markets allow you to. It takes you a while I think to get the right kind of investors, but if you say long-term cash flow is how we measure the business, pretty soon you get investors who are willing to invest on that basis.
We were chatting a little bit before the show and this is the perfect place in the story, too. So at the end of , Amazon wraps up the year with million in revenue, up from 16 the year before. Incredible growth. But I think, to my mind, the most incredible thing that happens at the end of is Jeff publishes his first annual letter to shareholders. The document is a masterpiece of long-term thinking.
How did that document come together? I wish I was a coauthor. You need some more marketing power. We brought in, hired some more. Joy was unusual. She was very smart. She ended up graduating from Harvard Business School. She came in second in the nation on the national accounting exam. So, clearly she was smart and somehow —. All she had done, in some ways she had taken — she had been CFO of a small company in the East Coast that had gone public.
David: I believe she was in her early 30s when she joined Amazon. Very young. Jeff is a very tough interviewer in the sense that he will interview a whole bunch of people until he finds somebody that he likes and thinks can do the job.
He talks about setting the bar very high. He had a great lunch with her. He was impressed with her. But she was also involved in that letter I think. Ben: Wow. Speaking of the IPO start to finish, was that hard for the company in an era where they had been doing so much PR and so much marketing, and Jeff had been doing all these public appearances to endure that quiet period?
It was an era when, yes, the company was starting to get a lot of attention. We did get some criticism then and even today on how much we disclosed beyond what the securities laws in New York, you know, the NASDAQ requires that you disclose everything you have to. And how many customers do you have? How fast does books grow versus video? I think maybe bricks and mortar retailers, do they release monthly sales numbers or something? You at least see them. So I think that was going on even then.
You get so focused on that cost to acquire a customer number and making that go down and increasing your lifetime customer value. Have you ever experienced in other private companies, someone who felt that that was proprietary and that was not something they would divulge in their pitch decks or anything like that? I mean, I do think sometimes it also comes up. Well, another one for some of our companies that have gone public has been backlog.
Tom: So I think a lot of companies refuse to do that and analysts would love to have it. It also relates to predicting a range for next quarter or next year. David: So one more. But one topic that happened a couple years later that I want to ask you about, Tom, is in so 2 years after the IPO, Amazon did a convertible dead offering and raised a billion and a quarter dollars in the debt markets.
Getting that large capitalization at that point, did that help the company survive the crash that came thereafter? Tom: Money was available. David: I think it was 4. Tom: Which today is sort of where maybe interest rates are. But given the year history, those were low interest rates. So on the one hand, it did give us money to grow. Sometimes for companies, having a lot of money lead to bad habits. The debt holders, the value of the debt had gone down.
There was a lot of pressure from the debt holders. So really in or so, the decision — Jeff and board felt we need to cut cost and expenses. I think we barely did it in time in some ways. David: Which is amazing because I now get dog food for my dog from Amazon. David: I assume Amazon has figured out how to do it profitably now.
It is when you need to, you cut back. What other factors do you think played into Amazon making it through —. It was true even then at Amazon. They were still focused on customers and they were getting a lot of orders. Their leverage was concern or the problem. But underlying economics were not bad. So, I think that helped a lot.
And I think having good management that stuck out and was then able to focus down on cost controls. David: There are great stories in The Everything Store about those years at Amazon and the impact it had on the culture. David: So to wrap up, this has been an incredible story and having Tom join us for it has been special.
So I really wish I had put my bank account into Amazon at that point in time. I was buying Amazon products but anyway, an incredible journey and super cool to relive this moment in history. We touched on this a little bit but had Amazon not gone public at that moment, where would we be?
Were people seriously interested? Was it ever on the table to raise more private capital or wait it out longer? So once you start buying product, building warehouses to put it in, you do need capital. So, obtaining capital in different ways has been, yeah, very important for Amazon. So I think it would have constrained growth. I mean, I know a lot of companies these days, they want to stay private as long as they can and it does depend on their business model.
Ben: Makes sense. I feel like Amazon exhausted all the options. Tom: We did two kind of events relating to that financing and so forth. We can jointly own it. So there are lessons in all of that for anybody who wanted to go public that your competitors sometimes do try to take it. But really, neither they nor anyone else really made a run at us and partly because I think a lot of traditional companies always thought we were overvalued.
So it was actually a benefit. But Amazon as an acquirer, it feels like has kind of internalized those lessons and I think about the Zappos acquisition during the recession, Or the Quidsi acquisition, both of which are written about extensively in the everything store. Ben: Sure. I mean, the internet was… you have to believe that something is going to be a wave and be a little more contrarian than other people.
David: Without riding a massive wave. I think for me the flipside of that coin that I think really shines through in reading about and reading this history of Amazon at that time is the long-term thinking that Jeff and the company and the board had. Lots of people say they have it but to actually behave that way and make investments accordingly is quite impressive.
Tom: It also applies even today when you talk about new projects or initiatives at Amazon or other companies. I know Jeff likes to say it often takes 10 years to prove it. An IPO gives you the opportunity to do that because you then have the money to do it, you have to somewhat ignore what the market is doing though. One trend that I think we can observe from Amazon is actually doing corporate innovation well.
They build that business and they try desperately to build other ancillary businesses around it. Some are bigger and some are smaller. Sometimes you get a Microsoft that has an office and the windows but usually —. David: Google. Ben: Yeah, yeah. It will be fascinating to continue to watch the company and see what else.
David: I wanted to ask quickly. On one of their recent shows, they were talking about platform mentality and the importance of that at Amazon and perhaps how much DNA came from Microsoft into Amazon in terms of thinking about AWS as a true platform. Ben showed you, they posit this great Bill Gates quote that a platform is when other participants on top of you realize the vast majority of the economics in the industry and you only collect a small percentage.
How much thinking on that level happened at Amazon during that creation? But the difference in a way was platforms were somewhat considered static in the sense that you built a platform and then every couple of years you revised it or you sent out new software or machines. Internet was so much constant iteration. I have never heard this from Jeff earlier, but it seems to me with AWS the difference in a lot of ways, why it succeeded and had been able to take this lead and keep it partly was being first when others held back.
They had new features this year or something. You came out with Windows 8 or 10 but it was 2 or 3 years of massive coding. So, I think the world even on that has changed a lot. Ben: Right. He wanted to build something for the long term. When you think about a lot of the great companies, they've had founders who really wanted to accomplish something kind of beyond making the profit.
In some ways, this is tough. She was one of the key sources for the book. In so many ways we talk about on this show. It feels inevitable that the company went public when it did especially just hearing the story now. It was completely rational. It made sense and it gave the company the scale and the capital and the visibility that it needed to grow and outpace competitors. I do give it an A. I was just thinking the same thing. I mean, you look at the scale of Amazon today and even the scale in the years shortly after the IPO.
The only way that they could have achieved the outcome that they did was by going public. David: It feels like unnatural to think about an alternative history here. Should it all be combined or should we be a horizontal or a vertical business in this space? You even go back and forth long after you've started the business kind of playing both sides there. But I think the fact that Jeff and several of us thought the internet was going to be a very big deal and there was lots of potential and who knew where this could take you.
I think that often happens with technology where you realize that something is going to be very big but knowing the details that today, AWS would have come out of that, there was no way to predict that or think about that in those days. But again, it fits very well when you look back and say what the assets of Amazon were but also what the technology developments. So I think Joy is right in the sense that it was in some ways inevitable. But it took fabulous commitment to innovation and really hiring good people.
So you should not neglect that for inevitability. David: Okay. With that, Carve Outs. It will be interesting to think how many of our Carve Outs will be available on or in some ways served to you by Amazon. David: No matter what your Carve Out is, Amazon is involved in it.
Ben: That would be interesting to look back at our previous Carve Outs and figure out are there any that are not served to you either on AWS or be able to be shipped to you. David: Or uses technologies as part of the site that are not hosted by AWS. It would practically be impossible.
I actually went to their show last night here in Seattle. Some of the best working music that you can imagine. Great band. Made me think. Jenny and I went to the Stevie Nicks show this weekend in Seattle. She was awesome. Her 24 Karat Gold Tour, so great. Super great. Very fun. On the internet, you actually get increasing returns. That the bigger you are, the bigger you get and the better that your customer experience becomes.
That contributes to sort of the spiritual antecedent to aggregation theory and Amazon and many of the things that have happened. Brian Arthur, the economist who wrote the article, he went to Cormac McCarthy for help writing this piece. So Cormac, like, basically dismantled the whole piece, they reassembled it together and when you read it, it reads extremely cogently.
Not like a typical economic, academic paper. This story came out recently. I think a lot of us, you know — I like to read books on new technologies. Well, a different kind of technology which is the psychology of people, which again, is super important in business. I think I look forward to reading it. And Daniel Kahneman was and is now an emeritus professor at Princeton and Michael Lewis is an esteemed Princeton alum as well.
And looking forward to reading the book. Ben: Great. So, thanks so much for listening and have a great day. We finally did it. You can listen to the full episode above, which includes honorable mentions , or read our quick blog post below. Note: we ranked the list by our estimate of absolute dollar return to the acquirer. For more on our methodology, please see the notes at the end of this post. And for all our trademark Acquired editorial and discussion tune in to the full episode above!
Back in , Marvel Studios was recently formed, most of its movie rights were leased out, and the prevailing wisdom was that Marvel was just some old comic book IP company that only nerds cared about. Disney earns about two dollars in parks and merchandise revenue for every one dollar earned from films discussed on our Disney, Plus episode.
Not bad for a set of nerdy comic book franchises…. Tiny yet mighty! Who would have thought facilitating payments for Beanie Baby trades could be so lucrative?
Company Overview ; Nasdaq National Market · $ · (as of 03/31/) · Priced · That per-share price is up from Amazon's week low of $ and The IPO raised $54 million for Amazon, giving the company a market. consumers.1 Amazon shares began trading following an initial public offering (IPO) in May Its stock is listed on the Nasdaq Global Select Market