Microsoft Stock Split: After a Series of Splits in Last Century, can we Expect Share Split from Microsoft in 2022.

Microsoft Stock Split: After a Series of Splits in Last Century, can we Expect Share Split from Microsoft in 2022.
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Microsoft Stock Split: Analysing the scope of yet another stock split of Microsoft’s Stocks in the recent future.

While an investor makes an investment decision and looks up for company’s history, Microsoft stock split becomes an imminent part of it. Every investor wants to know how many times a particular company share did split in past and by what ratios. However, stock split does not change anything fundamentally for the company, it only brings about sentimental change, but it catches everybody’s eye.

Microsoft had a fantastic run over past couple of years by any measure and its share price rose 55 percent in 2021 and to an astonishing 441% in the past five years. The market capitalization has crossed 2 trillion for Microsoft and it did briefly become most valuable company of the planet. Microsoft has a noteworthy history of stock split. Let’s look at the history of stock split for Microsoft and then try to guess whether 2022 can be the next year in the list or not.

Microsoft Stock Split: History of Stock Split For Microsoft Inc

Microsoft was founded in 1975 by Bill Gates and Paul Alien. It began its trading on Nasdaq on 13th March 1986 under the ticker symbol MSFT and set its IPO price at $21 per share. Since then it has been memorable journey for the stock and it had nine stock splits in all these years, these splits are mainly concentrated in the era 1987 to 2000, and its last split was in year 2003. But as a matter of fact, if anybody had invested at the time of IPO, buying even one share, he/she would have 288 shares as of today. Here is the summary of Microsoft stock split tabulated below:

Date
Split Ratio
Price Before Split
Price After Split
September 18,1987
2:1
$114.50 (Sep 18)
$53.50 (Sep 21)
April 12,1990
2:1
$120.75 (Apr 12)
$60.75 (Apr 16)
June 26,1991
3:2
$100.75 (Jun 26)
$68.00 (Jun 27)
June 12,1992
3:2
$112.50 ( Jun12)
$75.75 (June 15)
May 20,1994
2:1
$97.75 (May 20)
$50.63 (May 23)
December 6,1996
2:1
$152.875 (Dec 6)
$81.75 (Dec 9)
February 20,1998
2:1
$155.13 (Feb 20)
$81.63 (Feb 23)
March 26, 1999
2:1
$178.13 (Mar 26)
$92.38 (Mar 29)
February 14, 2003
2:1
$48.30 (Feb 14)
$24.96 (Feb 18)

*Source: Microsoft Investor Relations

Microsoft has undergone both 2 for 1 and 3 for 2 stock splits. A 2 for 1 stock split means that one additional share is given for every share held. In a 3 for 2 stock split, an additional share is given for every two numbers of shares held.

Microsoft Stock Split: No Split in Last 19 Years

The last Microsoft stock split was on 14th February 2003. Since then, there has been no announcement regarding the same. It has been 19 years as of 14th February 2022 for the last split. One more thing that stands out is that Microsoft aggressively announced splits in the first decade, especially from 1990 to 1999 and they had seven splits in these years. But, as the dot com bubble hit the market, Microsoft Inc shares also slumped in the period from 2000 to 2002.

Another thing noticeable in the history of the Microsoft stock split is that all the splits were initiated after share price crossed $100. But split of 2003 was different, neither share price crossed $100 nor it seemed that it will cross that mark soon. Yet Microsoft Inc announced 2:1 share split at just share price of $48.

Also, 2003 share split was memorable moment for the shareholders for another reason. It was the first time that Microsoft Inc declared a regular dividend. Declaring a dividend at any board meeting shows the confidence and faith of management for the long term growth of the company. Microsoft believed that the step of share split even at $48 and simultaneous declaration of dividend was a strategic move to attract broader range of investors in the market.

Read : Tesla Stock Split

Also read : Amazon Stock Split

Microsoft Stock Split: The Share Splits Were Successful

Microsoft stock split history also provides another very interesting input. Any share split is meant to provide the short term push to the stock and in case of Microsoft Inc, most share splits were successful in doing so. The only exception being 1987 split, when the share price on the following day was less than the proportional decrease in the share price due to split. Specifically, the closing price was $114.50 on 18th September 1987, which should have opened on $57.25 on the following day, but it opened at $53.50.

Otherwise, all the other splits were successful and it implied gain post-split. The largest gain was from 1996 split when 2:1 stock split implied $76.39 price on the following day, but it was $81.75, implying a 7% gain just due to split. It is a known fact that split do not have any theoretical impact on the balance sheet or the market capitalization of the company but 1996 split showed that shareholders do give lot of importance to split before making investments.

Microsoft Stock Split: Is Another One Coming After All These Years

It has been a long time that Microsoft has announced the share split. Considering the present scenario, it is highly unlikely that any split will be announced in the near future. But the matter of fact is that very few companies have announced share split in last two decades. For example, Amazon had three share split and all were done in the span of two years from 1998-1999.

Since then, it has been more than 22 years but there is no pondering upon the same by the management. Similar is the case with Microsoft, who has not given any clue about the next possible split in last two decades.

In the history, all the splits have come when shares have crossed $100 except 2003, but this time share price have crossed $340 in the month of December 2021 and is currently trading at $295 (as of 14th February 2022) but there is no sign for the split from the management.

One factor for delaying the Microsoft stock split could also be to maintain influence in the Dow Jones Industrials. The Dow Jones is a price weighted index and several rivals of Microsoft in terms of market capitalization has share price much greater than that of Microsoft Inc.

A split is likely to weaken Microsoft’s position in the Dow Jones and that seems to not attract management as they try to establish Microsoft Inc as a leader of the tech industry. It is a million-dollar question that when Microsoft will announce next split, and in all considerations, it is not likely to do so in near future, but Microsoft is a brilliant company and its share price since 1986 have shown that split can provide short term positive momentum to the share price.

-Vineet Agarwal

Note: Crowdwisdom360 collates Predictions and data from all over the net and has no in-house view on the likely trends in the Stocks or Crypto Coins. Please consult a registered investment advisor to guide you on your financial decisions.

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