If I’d invested $1,000 in Amazon stock 5 years ago, here’s how much I’d have now!

Amazon The stock (NASDAQ: AMZN ) is one of the winners of the pandemic as online retail explodes in a world where home ordering is commonplace. However, as public health restrictions have been relaxed, the e-commerce giant is giving up all those benefits. The company lost more than half its value by 2022.

With Amazon’s stock price hovering below $100 these days, I feel like a bargain and investing in the company for the first time. Time will tell if it was a wise move.

But, how much if I had invested $1,000 half a decade ago? Let’s explore.

Five years back

As the five-year chart below shows, Amazon’s pandemic boom is very fast. The stock then flatlined for about 18 months before falling to current levels. It has been quite a journey for long-term shareholders.

Five years ago, Amazon shares were $70.26 each. So, with $1,000 to invest, I can buy 14 shares, leaving $16.36 in spare change.

At the current share price of $97.24, my position would be $1,361.36. Despite the roller-coaster ride, a respectable 38% return over five years.

However, during that time, the stock’s reputation as an investment to beat the market has been somewhat tarnished. For context, the S&P 500 index advanced 52% since 2018.

Also, Amazon is not a good choice for people looking for passive income. The company doesn’t pay dividends, so I don’t have any extra pay to add to my total return.

Another thing to remember is that, as a UK investor, I have benefited from the depreciation of sterling against the dollar over the past five years. Therefore, when converted to kilograms, my return will be higher than the calculations measured in greenbacks suggest.

Currency risk is a factor I consider when investing in US stocks. While this may have been possible in the past decade and a half, it may not necessarily be the case in the future.

Outlook for Amazon stock

So, is Amazon a good investment right now?

At first, there were still dark clouds on the horizon. The company recently announced 9,000 job cuts to bring the 2023 total to 27,000 layoffs. Efforts to streamline the business can increase profits but there is a risk that it can affect the quality of service that customers have become accustomed to.

However, fourth-quarter sales beat Wall Street expectations. Growth of 9% brought the total to £121bn. Furthermore, Amazon Web Services continued to show positive momentum, increasing sales by 20% – but this was the lowest expansion rate for the division in the company’s history.

So, it’s natural that the financial picture is mixed. That said, I am confident about the company’s long-term prospects. Amazon has undertaken a multi-decade investment program in logistics infrastructure, which puts it in a good position to benefit if consumer confidence improves.

What’s more, the advertising and cloud computing divisions are showing continued strength, even if growth rates are slowing. Overall, the risk/reward profile looks quite attractive to me after the share price falls, but there are many challenges ahead.

I recently took a small position in the stock and will be closely monitoring this year’s financial results for evidence that the bull case remains intact.