Could be a Maker Stock millionaire?

Everyone knows if you had bought (AMZN 5.73%) stock when it was just an online bookseller and it has held up until today, you would be a millionaire many times over. A $10,000 investment back then was worth about $11.7 million today.

But Amazon has grown far beyond its bookseller roots and is now an integral part of the global economy. The company itself is worth nearly $1.2 trillion, the size of a few small countries combined. It’s fair to wonder if the kind of growth needed to create new millionaires from an investment in the e-commerce giant is still possible.

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Amazon’s stock has lost 40% of its value from its all-time high and has fallen more than 30% in 2022 alone, pressure on consumers from runaway inflation, rising costs and the deteriorating economy taking its toll. Wall Street still looks good, but Main Street not so much.

With that as a backdrop, let’s see if can still turn a $10,000 investment into $1 million.

A global phenomenon

Amazon isn’t alone in feeling the ill effects of a depressed consumer. Many online retailers, whether they sell general merchandise like Amazon and Etsy or cars like carvanaare reeling from the blows suffered by consumers.

Etsy’s stock is down 60% this year, and Carvana has lost 80% of its value (ouch!), but Soft is off 53%, parent Content logic is down 48%, and even high-end retailer posh mark saw 34% of its value ebb.

And it’s not just at the American Latin American retailer MercadoLibre is down 31%, while China Ali Baba and are off 24% and 20%, respectively.

Amazon driver delivering the package.

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A Retail Relapse

Amazon’s recent reported revenue reflects how much consumers are cutting back on spending. While overall sales were up 7% year-over-year, first-quarter retail sales fell nearly 2% to $56.5 billion, though that was the result of international business from Amazon; U.S. retail sales increased 7.5% from 2021.

Even so, its operating expenses here at home soared 16% from a year ago, resulting in total operating losses of $2.8 billion. It ended up reporting a net loss of $3.8 billion, or $7.56 per share, from $8.1 billion a year ago. Much of his loss, however, was due to his investment in the electric truck maker Rivianwhich has seen its value deteriorate by more than 80% since its IPO last year.

Yet, as Amazon notes, its consumer-facing business has grown 23% over the past two years, including a 39% gain in 2020 due to the pandemic, which forced the e-commerce giant to double in size. of its distribution network – and therefore to be done in just 24 months.

It is also extending its Prime loyalty program beyond the confines of the website. No doubt partly in response to his rival Shopify Increasingly vertically integrated, Amazon will allow members to use their benefits on select retail sites to expand their purchases in the future.

People watching computer servers.

Image source: Getty Images.

Look to the cloud

While Amazon’s e-commerce prowess garners the most attention, Amazon’s cloud computing operations have long been its profit center, and that continues to be true today.

Amazon Web Services (AWS) posted a 37% increase in first-quarter revenue to $18.4 billion, while operating profits rose further, jumping 57% to $6.5 billion of dollars. As businesses will continue to migrate their operations and data to the cloud, AWS is expected to continue to grow at the breakneck pace it is currently experiencing, even as the number of competitors entering the market increases.

If I had a million dollars

So, can still be a millionaire maker? Well, as comedian Steve Martin once joked about being a millionaire and not paying taxes: the first thing you do is get a million dollars. Which is another way of saying that I no longer believe Amazon can be a millionaire maker, at least not for most investors.

With a long enough investment horizon, younger investors might be able to see their investment translate into such a payout, but for older investors, there may not be enough time to realize its potential.

But that doesn’t mean you shouldn’t invest in Amazon. In fact, I think the e-commerce giant is a great stock to buy, even if we’re heading into a recession. This will eventually pass and a bull market will return. So, with its price knocked down so far, there might not be a better time than now to buy stocks. Don’t expect them to turn into a million bucks.

Virginia C. Taylor