Introduction to Microsoft Stock Splits
Microsoft Corporation (MSFT) is one of the world’s leading technology companies, known for its innovative software products and services. As a publicly traded company, Microsoft’s stock has been a popular choice among investors seeking growth and stability. Throughout its history, Microsoft has split its stock nine times, significantly impacting the number of shares outstanding and the stock’s price per share.
What is a Stock Split?
A stock split is a corporate action that increases the number of a company’s outstanding shares by dividing each existing share into multiple shares. The primary purpose of a stock split is to make shares more affordable and accessible to a broader range of investors. When a company splits its stock, the total value of an investor’s holdings remains the same, as the split affects all shareholders equally.
Why Companies Split Their Stock
Companies like Microsoft choose to split their stock for several reasons:
- To make shares more affordable for individual investors
- To increase liquidity in the stock market
- To attract a wider investor base
- To maintain a desired price range for the stock
By splitting its stock, a company can make its shares more accessible without affecting its total market capitalization.
Detailed History of Microsoft Stock Splits
Since its initial public offering (IPO) in 1986, Microsoft has executed nine stock splits. Here is a comprehensive list of Microsoft’s stock split history:
First Stock Split: September 21, 1987
Microsoft’s first stock split occurred on September 21, 1987, with a 2-for-1 split ratio. This split doubled the number of outstanding shares, while halving the price per share.
Second Stock Split: April 16, 1990
On April 16, 1990, Microsoft executed its second stock split, again with a 2-for-1 split ratio. This split further increased the number of outstanding shares and made the stock more accessible to investors.
Third Stock Split: June 27, 1991
Microsoft’s third stock split took place on June 27, 1991, with a 3-for-2 split ratio. For every two shares held, shareholders received an additional share, effectively increasing their total holdings by 50%.
Fourth Stock Split: June 15, 1992
The fourth Microsoft stock split occurred on June 15, 1992, once again with a 3-for-2 split ratio. This split further increased the number of outstanding shares and made the stock more liquid.
Fifth Stock Split: May 23, 1994
On May 23, 1994, Microsoft executed its fifth stock split, reverting to a 2-for-1 split ratio. This split doubled the number of outstanding shares and halved the price per share.
Sixth Stock Split: December 09, 1996
Microsoft’s sixth stock split took place on December 09, 1996, with a 2-for-1 split ratio. This split continued the trend of increasing the number of outstanding shares and making the stock more affordable.
Seventh Stock Split: February 23, 1998
The seventh Microsoft stock split occurred on February 23, 1998, again with a 2-for-1 split ratio. This split further enhanced the stock’s liquidity and accessibility.
Eighth Stock Split: March 29, 1999
On March 29, 1999, Microsoft executed its eighth stock split, maintaining the 2-for-1 split ratio. This split continued the company’s strategy of making its stock more attractive to a wider range of investors.
Ninth Stock Split: February 18, 2003
Microsoft’s ninth and most recent stock split took place on February 18, 2003, with a 2-for-1 split ratio. This split marked the last time Microsoft divided its shares, as the company has not executed any stock splits since then.
Impact of Microsoft Stock Splits
Stock splits have a significant impact on a company’s share price and the number of outstanding shares. When a stock split occurs, the share price is reduced proportionally to the split ratio, while the number of outstanding shares increases by the same factor. However, it is essential to note that stock splits do not directly affect a company’s market capitalization, as the total value of the company remains unchanged.
Long-term Performance of Microsoft Stock
Despite the numerous stock splits, Microsoft’s stock has delivered impressive long-term performance. According to a CAGR (Compound Annual Growth Rate) analysis, a $10,000 investment in Microsoft stock on August 21, 2014, would have grown to $109,029 by August 19, 2024, representing a total return of 990.29%. This growth includes the reinvestment of dividends, which have been a significant component of Microsoft’s shareholder returns.
Additional Information on Microsoft Stock
Microsoft’s Initial Public Offering (IPO)
Microsoft went public on March 13, 1986, offering 2.5 million shares at a price of $21 per share. The IPO raised $61 million for the company, which was used to fund its growth and expansion plans.
Microsoft’s Dividend Policy
In addition to stock splits, Microsoft has consistently rewarded shareholders through regular dividend payments. As of August 2024, Microsoft pays a quarterly dividend of $0.75 per share. The company has been increasing its dividend over time, reflecting its strong financial performance and commitment to shareholder returns.
Current Status of Microsoft Stock
Microsoft’s stock trades under the ticker symbol MSFT on the Nasdaq stock exchange. As of July 30, 2024, there are 7,433,038,381 shares of Microsoft stock outstanding, reflecting the cumulative effect of the company’s nine stock splits. Microsoft’s stock remains a popular choice among investors, thanks to the company’s strong market position, consistent growth, and attractive shareholder returns.
In conclusion, Microsoft’s stock split history is a testament to the company’s long-term success and its commitment to making its shares accessible to a broad range of investors. With nine stock splits executed between 1987 and 2003, Microsoft has significantly increased its number of outstanding shares while maintaining its position as one of the world’s most valuable companies. As Microsoft continues to innovate and grow, its stock is likely to remain a compelling investment opportunity for those seeking exposure to the technology sector.
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