Jeff Bezos Says a Company's Stock Price Doesn't Always Reflect the Business, a Lesson From Amazon's Dot-Com Crash That Investors Can Apply Today
And he would know. At one point, following its public offering, 95% of Amazon's stock value was wiped out.
Overview
Investors understand that the shares they hold are stakes in that underlying company's success or failure. Nevertheless, investors also understand that the company's success or failure -- or potential -- isn't always reflected in that stock's price. The trick is just knowing when and to what degree that disconnect exists.
That's something Amazon (NASDAQ: AMZN) founder Jeff Bezos was forced to accept early on. Although he took his e-commerce giant public in 1997 -- in the midst of dot-com mania -- the dot-com crash of 2000 crushed this young stock. All told, AMZN stock fell from a peak of $113 to a low near $6 during this turbulent period, shaking investors' confidence in the fledgling company.
Jeff Bezos. Image source: Amazon.com Inc.
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Originally published at www.fool.com.