If You'd Invested $1,000 in Amazon 5 Years Ago, Here's How Much You'd Have Today

Key Points

• Amazon has significantly underperformed the S&P 500 over the past five years.

• There are a few reasons for this, including the post-pandemic plunge in e-commerce volume.

• Amazon looks like an attractive stock at the current level, even with the market at an all-time high.

• 10 stocks we like better than Amazon ›

I won't sugarcoat it: Amazon (NASDAQ: AMZN) hasn't exactly been the best-performing stock over the past five years, with a gain of about 56% during that time period. In other words, a $1,000 investment in Amazon five years ago -- on Sept. 17, 2020 -- would be worth $1,560 today.

That is significantly less than the S&P 500 (SNPINDEX: ^GSPC), which has delivered a 112% total return over the past five years. So, why did Amazon produce less than half of the gains as a simple S&P 500 index fund?

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Image source: Getty Images.

Why did Amazon underperform?

Let's be clear: It isn't that Amazon is performing poorly. And before you judge the last five years of performance, it's important to put that time frame into context.

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Specifically, five years ago, in mid-September 2020, the world was essentially still locked down due to the COVID-19 pandemic. As a result, e-commerce demand was incredibly strong. In fact, from the start of 2020 through mid-September, Amazon had already risen by 63% versus just a 5% total return from the S&P 500. In other words, when looking at the past five years, Amazon was already starting from a place of strong performance.

As a matter of fact, if we look at Amazon versus the S&P 500 from the beginning of 2020 through today, Amazon is actually ahead by about 26 percentage points.

Should you invest $1,000 in Amazon right now?

Before you buy stock in Amazon, consider this:

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Matt Frankel has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.