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Homesave and investAmazon bought MGM for $8.5 billion. Here's how much you'd have if...

Amazon bought MGM for $8.5 billion. Here’s how much you’d have if you invested $1,000 in the tech giant in 2011

Amazon made waves in Hollywood Wednesday when it announced that it would be acquiring MGM Studios for $8.45 billion. Amazon expects the massive purchase of the home of the "James Bond" and "Rocky" franchises to bolster its Prime Video service, which founder and outgoing CEO Jeff Bezos has in the past said helps attract Prime subscribers who in turn buy more from the company.

The acquisition will allow Amazon to "reimagine and develop" MGM's "treasure trove of [intellectual property]," said Mike Hopkins, senior vice president of Prime Video and Amazon Studios.

Shares of Amazon were up a little less than 1% in the wake of the announcement, but if you invested in Amazon back in 2011, your investment would still be a blockbuster success. Over the past decade, the stock has grown 1,588%, with Amazon's market cap growing from $88.1 billion to $1.7 trillion.

In contrast, the S&P 500 index has earned a return of 287.5% since 2011.

A $1,000 investment in Amazon on May 26, 2011 at $195 per share would be worth $16,881.75 at Wednesday afternoon's share price of $3,291.94, according to CNBC's calculations. If you measure it from December 12, 2016, the day that Prime Video went global, a $1,000 investment would still be worth $4,280.85.

That's roughly on pace with Netflix, which would have seen a $1,000 investment turn into $4,079.65 over the same 4.5 year stretch, and into $13,354.81 since 2011.

The MGM acquisition is the second-biggest in Amazon's history, dwarfed only by the $13.4 billion it spent to acquire the Whole Foods supermarket chain in 2017.

With MGM in its growing portfolio — the company is also reportedly spending $465 million to produce one season of a "Lord of the Rings" TV series for Prime Video — Amazon has signaled that it isn't going anywhere amid competition from Disney, Netflix and HBO Max for streaming subscribers.

Of course, Amazon's mammoth growth isn't due to the popularity of its shows and movies, but rather the loyalty its customers have to its Prime subscription service, which they help cultivate. Over the past year, Amazon solidified its grip on consumer retail as shoppers were stuck at home due to the pandemic, and in April the company said that it now has 200 million Prime members — an increase of 50 million from January 2020.

Amazon has enjoyed an ever-growing slice of the digital shopping market share, which has been fueled by events like its popular Prime Day sales event, as well as its advertising unit, whose $6.9 billion in revenue is now more than twice as big as SnapTwitterRoku and Pinterest combined.

The company's value has also been supercharged by Amazon Web Services, the cloud computing business that counts Netflix, Airbnb and Facebook among its myriad customers. Started in 2006, AWS brought in $13.5 billion in revenue last quarter, as well as 47% of Amazon's operating income.

Despite Amazon's strong stock growth, any individual stock can over- or under-perform and past returns do not predict future results. Make sure to carefully research your options before investing your money in the stock market.

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