Former Amazon.com Inc. Founder and CEO Jeff Bezos shared a unique perspective on stock market dynamics and company growth back in 2018, offering insights that go beyond the daily fluctuations of Amazon’s stock prices. Bezos emphasized that he doesn’t spend time dwelling on the daily stock price, stating, “I don’t spend any time thinking about the daily stock price; I don’t.”
During an interview at the Economic Club of Washington, D.C., Bezos elaborated on his philosophy, cautioning against overestimating intelligence during stock highs and feeling overly impacted during stock lows. He highlighted, “When the stock is up 30% in a month, don’t feel 30% smarter. Because when the stock is down 30% in a month, it’s not going to feel so good to feel 30% dumber.”
This mindset reflects a broader perspective for Bezos: “The stock is not the company, and the company is not the stock.” Despite stock market volatility, Bezos maintained focus on Amazon’s core business metrics and customer engagement strategies.
In a significant milestone, Amazon achieved a market cap exceeding $1 trillion on Sept. 4, 2018, joining the ranks of a few publicly traded U.S. companies, including Apple Inc. This success was attributed to Amazon’s diverse portfolio and innovative business strategies. Bezos emphasized the importance of a company’s fundamentals – its business model, leadership, and market position – over short-term stock performance.
Bezos’s journey with Amazon, commencing in 1994 with an initial investment of $245,573 from his parents, transformed the company from a garage startup into a multinational corporation worth $1.6 trillion. The company’s growth is attributed to its innovative business model, expansion into various sectors, and its significant presence on the internet.
As of December, Bezos’s shares in Amazon are valued at about $144.9 billion. In the last five years, Amazon’s revenue increased by 121%, reaching $514 billion in 2022, with a substantial contribution from its AWS business segment. Despite this success, Amazon reported a net loss of $2.7 billion in 2022, highlighting the contrast between its significant market cap and current profitability.
Bezos’s insights provide valuable lessons for investors and entrepreneurs alike, emphasizing the importance of focusing on a company’s underlying fundamentals rather than reacting to short-term market trends. This philosophy is especially relevant for those investing in startups and emerging technologies, where careful evaluation of a company’s vision, leadership, and market potential is crucial.
Investing in startups and emerging technologies at an early stage can be a gateway to substantial future returns, provided the startup’s innovative potential is realized. Success in this strategy requires a keen eye for potential and a willingness to embrace the risks associated with early-stage investments.
