Former Wall Street insider Paul Mampilly vividly remembers October 1, 2001. He recalls the moment in a recent blog article. That’s the day all the financial experts were saying Amazon was bankrupt and would soon go out of business. Sell Amazon stock, they advised, get out while you still can. Amazon, along with all the other Internet and high tech stocks, made huge gains through the late 1990s, during the Internet bubble. However, in 2000 and 2001, the Tech Wreck brought a huge crash of high tech, NASDAQ stocks. Many of them did go out of business. Amazon went down to a low of $5.51.
Paul Mampilly was actively managing millions of dollars, so he remembers how everybody believes Amazon would soon be another one of the fallen Internet giants. But, as time has shown, all those experts were wrong. Amazon at $5.51 was a terrific bargain. Since then, until the time he wrote that article, it’s returned 15,917%. Every $100 someone spent on Amazon stock that day is now worth $1.6 million. Even if someone bought it at its bubble high on December 9, 1999, it would still have returned 992%. That’s far above the S&P 500’s return of 75%.
Paul Mampilly now writes the newsletter Profits Unlimited from Banyan Hill Publishing. When he wrote a recent article, Amazon had just bought Whole Foods for $13.7 billion, and the experts were once again pronouncing Amazon’s doom. Moody’s said it might be the weakest of the major retail companies. Other experts said they would soon have problems, and Wal-Mart was going to crush Amazon.
Or Amazon was just plain going to lose money on Whole Foods. But Amazon began applying their vast data and experience to Whole Foods right away, not even waiting one day. On the very first day they owned the company, they slashed its prices by 43%. After all, high prices was the biggest reason many consumers avoided buying food at Whole Foods. Given an economic choice, most people would rather eat organic foods than ones sprayed with pesticides. However, many cannot or will not pay too much extra. Amazon addressed that issue immediately. According to One Click Retail, Whole Foods sold $500,000 the first week of Amazon’s ownership. According to CNBC, foot traffic to Whole Foods has increased 25% since Amazon lowered prices. To know moure, click here
When Amazon integrates Whole Foods and Prime membership and implements cashless and cashierless shopping, it will pose a real threat to the major supermarket chains such as Kroger and SuperValu, Paul Mampilly predicts.
Paul Mampilly @ Twitter.com