I won't sugarcoat it: Amazon (AMZN +1.43%) 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?
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.
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.
NASDAQ: AMZN
Key Data Points
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.
