Surprising facts: Amazon made a loss for the first seven years of its existence, still sometimes does and only makes relatively slim profits when it doesn't.

> In Amazon’s early years, a running joke among Wall Street analysts was that CEO Jeff Bezos was building a house of cards. Entering its sixth year in 2000, the company had yet to crack a profit and was mounting millions of dollars in continuous losses, each quarter’s larger than the last. Nevertheless, a segment of shareholders believed that by dumping money into advertising and steep discounts, Amazon was making a sound investment that would yield returns once e-commerce took off. Each quarter the company would report losses, and its stock price would rise. One news site captured the split sentiment by asking, “Amazon: Ponzi Scheme or Wal-Mart of the Web?”

> Sixteen years on, nobody seriously doubts that Amazon is anything but the titan of twenty-firstcentury commerce. In 2015, it earned $107 billion in revenue, and, as of 2013, it sold more than its next twelve online competitors combined. By some estimates, Amazon now captures 46% of online shopping, with its share growing faster than the sector as a whole. In addition to being a retailer, it is a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading provider of cloud server space and computing power. Although Amazon has clocked staggering growth—reporting double-digit increases in net sales yearly—it reports meager profits, choosing to invest aggressively instead. The company listed consistent losses for the first seven years it was in business, with debts of $2 billion. While it exits the red more regularly now, negative returns are still common. The company reported losses in two of the last five years, for example, and its highest yearly net income was still less than 1% of its net sales.

> Despite the company’s history of thin returns, investors have zealously backed it: Amazon’s shares trade at over 900 times diluted earnings, making it the most expensive stock in the Standard & Poor’s 500. As one reporter marveled, “The company barely ekes out a profit, spends a fortune on expansion and free shipping and is famously opaque about its business operations. Yet investors . . . pour into the stock.” Another commented that Amazon is in “a class of its own when it comes to valuation.”

> Reporters and financial analysts continue to speculate about when and how Amazon’s deep investments and steep losses will pay off.
Shared publiclyView activity