Home Investing If Someone Invested In These Companies 10 Years Ago, Here’s What Would Have Resulted

Investing

If Someone Invested In These Companies 10 Years Ago, Here’s What Would Have Resulted

Simi February 13, 2018

In 2006, the phone was still something new and budding – a far cry from the amazing device we hold in our hands every day. All you could really do was take a phone call or send and receive an exceptional text message. The first iPhone wasn’t even out yet – no high-resolution cameras and definitely no high-speed internet on mobile phones. Even the net was relatively young. It hadn’t gained the kind of ground it has gained today. The first version of Google Maps was rolled out and MySpace was still the leading social media network in the world.

Blackberry and Nokia were the top-selling smartphones and Digg was the most popular social news site. The first tweet was sent on Twitter, Google purchased YouTube, which was still growing up and in terms of user experience, nothing was quite as extreme as what we have today. Overall, they were simple times, and everyone was pretty comfortable with how ‘well-developed’ everything was.

A year later, the first iPhone was launched and the whole world literally went berserk. Apple Inc faced unprecedented growth and out of the blue, more and more companies followed suit. Technology moved so fast a mere ten years seem like two decades had passed. Those ten years saw the growth of what were then considered startups to gigantic corporations and the fall of giants.

Overall, if you’d purchased shares in any one of these for ‘just’ $1000 back then, and were brave enough to hold through the 2008-2009 market crash, the kinds of profit you’d have sown would have been incredible. Most businesses that saw an exponential growth were tech-oriented startups, but it doesn’t stop there. Rest assured though, the least you would have expected was a tenfold increase in your profit margin.

Netflix

Back in 2006, Netflix was still heavily invested in the DVD retail business. They were waging a war against Blockbuster, and the only way they could win, it seemed, was to set their prices as low as possible. This decision translated very poorly in the markets and they were running incredible losses. At those desperate moments, they even offered to sell themselves over to Blockbuster for a measly $50 million – an offer Blockbuster wholeheartedly turned down.

January 2007 saw a major change that would turn the whole movie industry on its head. They announced they’d be offering an online streaming service to their subscribers. Back then, they only had a thousand films, a pretty small library of movies. In fact, there was no original content on their part yet, so most people didn’t really think much of it. In 2007, having a local, physical copy was what everyone was pretty much used to. It just had to be a brazen attempt to rip off Apple and Amazon – the two companies that pioneered downloadable movies at the time.

Interestingly enough, they were even brave enough to offer what they dubbed ‘the Netflix Prize.’ This was an offer of $1,000,000 to anyone who could come up with an algorithm that could best their own ranking algorithms. The award ultimately went to the BellKor’s Pragmatic Chaos team for beating Netflix’s algorithm by over 10% accuracy.

Seemingly, Netflix was going to be a dead franchise because nobody really saw their efforts going anywhere — behind the curtains though, they were really busy at work. Due to their aggressive marketing, great technology, and original content, their stock would proceed to jump by over 5000% in value over ten years. A $1,000 investment would have resulted in returns of $51,647.

NEXT >>

Jet Blue

In 2006, JetBlue was teetering dangerously on the edge. It was just six years old and was making losses. Investors were concerned regarding the introduction of Embraer 190s into the market, while the rest of the industry was still hung up on Airbuses. The launch itself was problematic and the end of the year saw the company suffer great losses.

At the end of the 2006-2007 fiscal year, there was a 29% dip in profits. If you’d thrown a thousand dollars at the company back then you’d have left poorer. In their defense though, they were seemingly embracing new ideas, and the lack of complacency on their end was the only true way they could have grown into the mega mammoth they are today.

People familiar with the inner workings of the industry still recall the days of JetBlue’s near demise. Their terrible year was mainly attributed to the company’s terrible handling of flights during the year. Valentine’s Day, 2007, for instance, had them cancel well over 200 flights, some of which were stalled on the runway for eight hours or more. Some would blame the weather, and sure, it factored in, but that wasn’t the real cause.

The real issue was that despite how well they portrayed themselves in the media, the belly of the company was a rotting mess. The communication systems were substandard and the staff had limited to no experience. When crisis struck, they didn’t have the kind of experience or tools to deal with the problem. To their benefit, too, they picked everything up and were up 39% in ten years. A $1,000 investment would have led to a total of $1,390 – $390 in returns.

<< Previous

NEXT >>

Google

Google is a company that needs no introduction. Launched back in 1998 as a competitor to Yahoo, most people would never have predicted its meteoric gains in the industry. Back then, nothing could possibly beat Yahoo in all its glory. Heck, Google even offered to sell itself to Yahoo for just $1,000,000, an offer they turned down.

In 2004, when Google announced it wanted to go public, the whole world was shaken. How much was Google really worth, and was it worth investing? At just $85 a share, it would proceed to jump to over $500 per share a decade later. Back then, nobody could really predict Google would grow as large as it is. A good example is Stephen Wozniak, a co-founder of Apple, who turned down the opportunity to buy the shares a few weeks before Google IPO.

Suddenly, Google was worth enough to acquire YouTube, and suddenly, heads at Yahoo turned. Google offered to sell itself, again, this time for $1 billion. The offer was turned down, yet again. Another blink of an eye and suddenly Yahoo is no longer at the top. After a multitude of acquisitions, including DoubleClick and Feedburner, Google transformed its advertising business into a multi-billion dollar franchise. Then came Gmail, and Yahoo mail was no longer relevant. In what turned out to be a sorry turn to fate, Yahoo was to be later acquired for just $5 billion, against Google’s $527 billion.

In retrospect, maybe the issue was that Google’s whole process was spearheaded by engineering, rather than the more traditional market approach. Ten years later, their stock valuation grew by 1000%. A $1,000 investment would have led to $2,200 in returns.

<< Previous

NEXT >>

Apple

Of course, Apple had to appear on the list thanks to its exponential after the release of the first generation iPhone. Despite already having a great foothold in the tech market due to the sale of Macbooks, 2007 was a revolutionary year.

You probably know how the story goes – Apple weren’t the first to introduce touchscreen technology. They weren’t first to have a camera on a phone, as many falsely believe. The real value of the iPhone was in how they executed. They brought a new level of simplicity to the interface. Let alone the clunkiness of Blackberry and the retro feel of the Android OS, which was still in its budding stages. Add all this to the fact that Apple’s iPod was already universally loved and Steve Jobs’ great launch of the product, and we have a winner.

This should have been an obvious choice, as you think of it now, but back then, things were very different. Apple were running a multitude of things at once. They were just done redesigning their new OS (Leopard) and were ready to launch. The whole thing was riddled with bugs and it had to go back to the drawing board.

The iPhone was revolutionary and adoption rates were like nothing anyone back then could ever have imagined. A few years later saw the release of the iPhone 6, the most well-received iPhone to date. As of 2017, Apple is the most valued public company in the world, and depending on the adoption of the iPhone 8 and X, it might as well be the world’s only trillion-dollar valuated company. A decade worth of progress saw an unprecedented 882% growth, what would have been $8,800 worth of returns.

<< Previous

NEXT >>

Walt Disney Co.

Disney has always been the cornerstone of the entertainment industry. Founded 94 years ago, it’s currently the world’s second-largest media conglomerate in terms of revenue. This is behind only Comcast. This is in addition to running some of the largest theme parks around the world. So how has Disney’s revenue fared over the last decade?

There has always been a lot of hype around the release of most of Disney’s films. 2006 saw the release of High School musical, opening to an astonishing 7.6 million viewers on the first day. In fact, January of the same year saw the company acquiring Pixar Animation studios, with Steve Jobs as the chief shareholder in the company, despite their earlier fallout.

2016 was perhaps one of the most difficult years for Disney. Not that it ran into any trouble making profits, oh no. There was Moana, The Jungle Book, Zootopia, and Rogue all breaking box office records, ensuring Disney stayed afloat. On the other hand, there was trouble over at subsidiary ESPN, where the number of subscribers remained particularly low.

Despite has faced all kinds of controversies over the years, which have included multiple lawsuits and accusations of child abuse. However, none of this has managed to make a dent in their profits. In fact, the 2017 acquisition of Fox saw the growth in the value of their stock, and they now own what’s about 40% of the entertainment industry. In August 2007, the share price was just $33.61. A decade worth of acquisitions and mergers has had the share price jump by an average annualized return of 12%, which translates to $101.20 per share as of August 2017. In other words, a $1000 investment would have yielded a $3,000 profit margin.

<< Previous

NEXT >>

Coca-Cola

Coca-Cola is famous for being one of the most ubiquitous companies in the world. They deal in everything from bottled water to all kinds of soft drinks and beverages. Chances are pretty high you’ve used a Coca-Cola product at one point in your life, whether knowingly or not.

Coca-Cola has been long considered ‘the most prolific company in marketing history’ owing to its flashy and often aggressive marketing campaign. Due to their easily recognizable brand image, it’s easily the most popular soft drink in the world. In fact, it gained some notoriety for being the first soft drink in space.

The company is known to consider lots of touch points on various consumers or otherwise prospective customers with the brand. These are then used as potential delivery channels for the company’s message. All these factors can be combined into what the company then uses as relevant communication systems. It’s a long-standing approach that has been able to create a consistent longing for the product.

Coca-cola, being as old as it is, has also had a long history of acquisitions. Some of the biggest brands it acquired over the decades have been: Minute Maid, Monster, FUZE, Vitamin water, and Bottlers Investment Group. The company’s most recent investment has been acquiring a minority stake in Suja Life LLC, a cold-pressured juice manufacturer. Coca-cola’s growth has been a steady one. Despite not being as astonishing as the likes of Apple and Google, it’s still worth mulling over what could have been. In 2007, a share went for $26.89, a figure that jumped 7.68% to $45.55 over the past decade. A $1,000 investment then would have yielded $1,693 in returns.

<< Previous

NEXT >>

Walmart

Walmart is a 1962-founded enterprise based in the US. As of 2016, it was ranked the world’s largest company by revenue and is also the largest private employer globally. Its headquarters are located in the US, but the country has branches in 28 different countries, some under completely different brand names.

In 2000, Walmart had carried out a lot of aggressive cost cutting in an effort to increase company revenue. True enough, this led to an increase in profits by 23%. However, that decision led to an increase in the crime rates in various Walmart outlets all over the country. The addition of stores was also happening at a rate that exceeded the rate of hiring new employees. During the 2016 fiscal year, for instance, more than 200 violent crimes – from kidnappings to stabbings and murders occurred at different Walmarts across the US.

Approximately one of these crimes was witnessed every day. Despite all this, by 2004, Walmart had over $256 billion in sales, a feat that earned them a top spot on Fortune 500’s largest company in the US. It would proceed to retain the same position even with the rise of rival Amazon.

The impressive growth of the company and its ability to retain its value for decades on end came with an average annualized return of 8% between 2007 and 2017. With over 1500 stores, 1400 Supercenters, 64 Neighborhood Market stores, and 500 Sam’s Clubs operation in the United States alone, the company grew in share price from $43.63 in 2007 to $78.08 in 2017. In other words, a $1,000 investment would have yielded a 78.95% increase in returns. In other words, you’d have $789 in profit.

<< Previous

NEXT >>

Microsoft

A company that needs no introduction, Microsoft is the poster child of the investment industry. The company was founded in 1975 as a garage start-up, and it wasn’t before long that they were approached by IBM to build an OS for a personal computer they were building. Gates and Allen were able to acquire an operating system (later DOS) that they would license to IBM and other computer manufacturers. It would later shift from the DOS system to a Graphic User Interface-based system that would help the company grow into what it is today.

The 95 and 98 launches of the Windows operating system marked a complete up-turn in the computing world. Sure, there were plenty other GUI-based systems out there. The most famous of these was the Macintosh OS, but the average user didn’t have enough money to afford such a device. That device was practically a mainframe computer by today’s standards.

What Microsoft managed to do better than others was to make a GUI-based system available to the market at a price they could easily afford. Then came the rise of the internet that saw the company boast even more unprecedented growth. Unlike most of the other tech industries, people saw the opportunity and Microsoft’s share price shot up to $85 in 2007 from $21 at launch.

If you’ve ever heard of ‘the Microsoft Millionaires,’ they were the lucky few (about 12,000 people) that held onto stock long enough to become six-figure earners. By 2005, there were an additional three billionaires, thanks to the growth of Microsoft. With an average annualized return of 11.21%, a $1,000 would have resulted in a 164% increase. That’s $640 in profits.

<< Previous

NEXT >>

Nike

Nike is a 53-year-old brand, but the last decade has seen some of the most explosive growth the company has ever faced since it was founded. It has grown so much, in fact, that in the last two years along, it has ballooned by over $10 billion.

The rise of Nike is a well-documented one; the primary athlete responsible? None other than the Jumpman himself, Michael Jordan. Back then, Nike was just another shoe brand, lagging dully behind Reebok and Adidas. When they suddenly got hold of the tongue-wagging wunderkind, they realized there was a significant way to balloon profits. See, Jordan was a great player, and he knew it. At the same time, he wasn’t afraid to break the rules, especially when he wasn’t the one who would incur the fines.

Nike had Jordan wear shoes that matched his kit, which was against NBA regulations. However, the only action that could be taken against him was to charge him a fine for every game he played in the shoes. All of a sudden, he’s making headlines for something other than his game, and people all over the US rushed to stores to get the ‘banned’ shoes. The publicity stunt was crazy profitable, and the company reaped every dollar they could. Even afterward, the tale of the Air Jordan continues to this day.

If you’d $1,000 invested in Nike during its IPO in 1982, that investment would be worth $700,000 right now. If the same amount was to be invested just ten years ago, it would have grown from $13.28 per share to $62.74 in 2017. That’s $4,700 in revenue over a decade.

<< Previous

NEXT >>

General Electric

The history is a long one filled with all sorts of bumps along the way. The company was first listed on the original Dow Jones Industrial Average in 1896. At the beginning of the 21st century, it’s the only remaining survivor, the rest having been dropped off in the preceding years.

The company saw exponential growth starting 1981 to 200, reaching an all-time high of $60.75, before selling off during the dotcom bear market. The growth stopped in 2005, when it gave way to a two-year-long consolidation pattern, followed by a 2007 breakout. Starting 2008, the company generally saw a dip in profits, likely because of the economy crash, driving the company nearly into bankruptcy. In March 2009, the company’s stock bottomed out at $5.73 per share but turned a bit higher going into 2011.

However, there was stalled progress into the 2012 breakout. This led to a failure to attract any healthy amount of buying interest. The resulting slow-motion uptick topped out $20 in 2013. The trend continued into 2013 when it was finally able to achieve a high of $33. From that time into 2017, it’s all been downhill. In the 8-month period beginning January 1st, 2017, the company lost nearly 23% of its value, hitting rock-bottom at $17 late in the year.

Despite the projections by Wall Street, JPMorgan stated they don’t believe there will be a turnaround. All factors considered, the General Electric company had its days, but in the end, it seems they weren’t enough to sustain itself. A $1,000 investment a decade ago, when the shares cost $38.87 would have led to a 36% loss. Your investment would currently be worth $360.

<< Previous

NEXT >>

Amazon

Amazon had one of the humblest beginnings of any of the companies on this list. It started out as what was supposed to be a space for selling books, and over the last decade, it’s propelled itself so far as to make its founder the wealthiest man in the world.

Amazon was one of the lucky companies to survive the dotcom bubble at the start of the new millennium. Over the next few years, Amazon hit an inflection point which saw the success of Amazon prime and the dominance of AWS that both sent the market value soaring higher than expected. It took 18 years since its IPO to catch up with Walmart, but only two years thereafter to double it.

One of the most important metrics for a publicly traded company is revenue growth, and if there’s something Amazon has been able to do better than most, it’s that. All the while Amazon seemingly ensured that it’s not too stuck up on making profits that it loses market share. Ultimately, that would become the story of how Amazon bested Walmart. This may seem counterintuitive as the purpose of business is to turn profit, after all. Amazon does make a profit, but just not in the traditional sense. Operating cash flow keeps the company afloat, and that’s an effort that’s definitely paid off.

Amazon is currently the industry leader in e-commerce worldwide, rivaled in scale only by companies like Alibaba. Even then, Alibaba has no real foothold in the US. Amazon is expected to grow by 50% over the next decade. Had you invested $1,000 a decade ago, you’d be 1,393% richer – that’s $13,930 worth of stock.

<< Previous

NEXT >>

FedEx

FedEx Corp is a company that engages is quite a number of provisions. These include transportation, e-commerce and various services operated through its subsidiaries. The branch most people are prone to be familiar with is FedEx Express. This is the arm that consists of domestic and international shipping services for delivery of packages and freight. The other branches that it operates under are TNT Express, FedEx Freight, and FedEx Ground. The Ground segment focuses on small package delivery and is usually in direct rivalry with UPS. The Freight segment consists of freight businesses that handle larger shipments.

Over the past decade, the company has significantly managed to diversify its business. However, the FedEx Express division still remains the largest and by far the most profitable piece of the company. In 2015, it generated $27.2 billion in revenue, which was 57% of the total revenue for the fiscal year. The ground segment follows a distant second with $13 billion in the same period.

In terms of earnings, the Ground segment seems to take the lead, though, since it has been generating much more income than the Express division in recent years. For instance, in the year ended 2016, the Express segment recorded an operating income of $1.9 billion against the Ground segment’s $2.2 billion. Furthermore, the growth of Amazon only marks a similar growth in FedEx’s revenue over the next decade.

How has the company performed over the last decade? Quite stable. In December 2007, the company’s shares went for a low of $89 but since increased to $247 at the end of 2017. A $1,000 investment would be worth $2,700.

<< Previous

NEXT >>

Starbucks

Founded in 1971, Starbucks is perhaps the best-known marketer, roaster and retailer of coffee in the world. They operate in 75 countries and offer various branded stores and products. The two main areas Starbucks has everything going for it is the brand name and the excellent consistency of its stores all over the globe.

Yet life wasn’t always smooth sailing for Starbucks. Back in 2007, its stock was struggling. It dropped by 42%, in a move often attributed to rushed expansion prospects. The company was forced to take various measures in an effort to get the visitor growth back on track. This included closing nearly all outlets for three and a half hours in order to teach every barista how to make a perfect espresso. This single move led to a loss of $6 million on that day alone.

Starbuck’s efforts would proceed to include poaching a new CTO from Amazon and spending huge chunks of money to replace outdated computers in its businesses. Some experts put the estimated time saved as a result of these efforts at 700,000 man hours. Eventually, these efforts would come to pay off, as the company sunk to an all-time low in 2009 at just $4 per share before recovering in the following years. With the expansion into China, the next year saw an increase in the company’s total revenue to $10 billion. The number would then steadily continue to grow up to an unprecedented high of $27 billion in 2017.

With their efforts focused on user growth, analysts that regularly track this company project a growth in earnings at an average annual rate of 15%. Had you invested $1,000 ten years ago, your stock would be worth $12,221.

<< Previous

NEXT >>

McDonald’s

McDonald’s currently holds the title of the world’s largest restaurant chain by revenue. Operating in 100 countries worldwide, it serves over 69 million people daily. The company’s revenues come from the royalties, rent, and fees the different franchises that it licenses pays them. This is also together with the sales in restaurants that it operates. According to a report by the BBC, it’s the world’s second-largest private employer, behind Walmart.

McDonald’s is virtually the face of the United States and its success as a worldwide player is representative of the countries dreams as a whole. McDonald’s wasn’t the first franchise in the business, but it’s the perfect example of how to execute the business model.

Like Starbucks, the main factor that helped propel the franchise’s incredible growth was its consistency with the products it offers. McDonald’s California and Connecticut are the exact same thing. This was the dream the founders Richard and Maurice had when they launched the business back in 1940. Thanks to this, customers know what to expect when they visit any outlet. This has been proven in the past to be a strong driving force behind how people choose where they are going to eat.

In terms of revenue, McDonald’s has seen a steady increase in profits from 2007, until a recent dip in the market. There was a drop in the revenue of 10 percent from 2016 to 2017 in Q3. These changes were attributed to a refranchising initiative, according to the company. However, over the last decade, the cost of McDonald’s stock increased from $58.91 in December 2007 to $173 towards the end of 2017. A $1,000 investment would have yielded an extra $1,936.

<< Previous

NEXT >>

RIM (Blackberry)

Another company that was at the top of its game in the 2006-2007 era was Blackberry. Strangely enough, after two failed attempts of acquisition and aggressive marketing, theirs is an inverse story of Netflix’s. A decade later, it lost almost all of its value.

In the early and mid-2000s, the ultimate phone you could get was a Blackberry smartphone. Google and Apple hadn’t yet arrived, and the Android prototype was just a terrible Blackberry clone. Neither company had an established relationship with carriers and none had established any consumer base. In fact, with their predictive text input algorithm, SureType, Blackberry (still known as Research in Motion – RIM) was in the best position to become an established tech oligopoly. Never mind that Nokia had the biggest worldwide user base, they were footed in the US, and that’s all that mattered.

Blackberry’s is a tale of what conservatism and complacency lead to in technology. As the world shifted away from troublesome QWERTY keyboards to touchscreen technology, they tried to appease their existing user base with the PlayBook tablet. They tied BBM to their own hardware which stifled adoption and by the time it was available to iOS and Android, it didn’t matter. WhatApp Messenger had already grown into a $19 billion company. Samsung, LG, and Sony jumped aboard the Android bandwagon, Blackberry tried to promote their Blackberry OS. They would later proceed to adopt the Android OS, but it was too late. All four devices failed to get any real foothold in the market.

They tried selling the company twice, and both times, nobody was interested. That was until they finally accepted to be bought off by Chinese firm TCL for just $4.7 billion. Ten years later from 2006 would see their stock dip by 93.9%. A $1000 investment would yield just $62.

<< Previous