As you may have already seen, Amazon.com (AMZN) marked the 20th anniversary of its IPO today, and what a ride it has been.  We’ve all seen the stats, but put simply, from its split-adjusted closing price of $1.958 on 5/15/1997, AMZN has rallied more than 48,800%.  Yes, you read that correctly, 48,800%!  In other words, a mere $100 invested in AMZN after its first day of trading would now be worth just under $49,000 today!

AMZN051517

In retrospect, just buying and holding AMZN twenty years ago was a no-brainer, but for the twenty years that it has been trading, the hardest thing for most investors was probably not to sell.  The chart below shows historical drawdowns from all-time highs for AMZN going back over the last 20 years.  As you can see, the ride up for AMZN has been anything but smooth.  While it may seem like AMZN does nothing but go up these days, it’s had plenty of rough patches.  In fact, for a seven-year stretch from the Spring of 2000 to the Spring of 2007, AMZN was consistently more than 50% below its prior all-time high, and at one point it was down 95%.  When you look back at the entirety of its life as a public company, AMZN has actually been at least 50% below its all-time high more than 36% of the time!

Even as recently as last March, the stock was down over 30% from an all-time high in what was the eighth such 30% drawdown (red line) since it came public.  Based on today’s price, that would be equivalent to a decline of $289/share.  These kinds of drawdowns look easy in retrospect, but they’re extremely hard to stomach in real time.  A lot of investors in AMZN now would have a hard time swallowing a decline of that magnitude today.  Would you?

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AMZN051517 drawdowns

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