Microsoft Stock Split: After a Series of Splits in the Last Century, can we expect a Share Split from Microsoft in 2022?
When an investor makes an investment decision and looks up to Microsoft’s history, a stock split becomes an important part of the decision-making process. Every investor wants to know how many times a particular company share did split in past and by what ratios. However, a 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 the past couple of years by any measure and its share price rose 55 percent in 2021 to an astonishing 441% in the past five years. The market capitalization has crossed 2 trillion for Microsoft and it did briefly become the most valuable company on the planet. Microsoft has a noteworthy history of stock splits. Let’s look at the history of a stock split for Microsoft and then try to guess whether 2022 can be the next year on the list or not.
- Market Cap as of June 14th: $1.8 T
- Price of Stock: $242
- Performance this year: -27.6%
- PE: 25.3
- Forward PE: 27.3
- EPS: $9.6
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 a 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 the 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 the 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 Split: No Split in the Last 19 Years
The last Microsoft stock split announcement was on January 16th, 2003, trading began with the new price on February 16th, 2003. Since then, there has been no announcement regarding the same. It has been 19 years as of June 14th, 2022 since 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 the share price crossed $100. But the split of 2003 was different, neither share price cross $100 nor did it seem that it will cross that mark soon. Yet Microsoft Inc announced a 2:1 share split at just a share price of $48.
Also, the 2003 share split was a 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 a share split even at $48 and simultaneous declaration of the dividend was a strategic move to attract a broader range of investors in the market.
Read: Tesla Stock Split
Also read: Amazon Stock Split
MSFT Stock Split: The Share Splits Were Successful
Microsoft stock split history also provides another very interesting input. Any share split is meant to provide a short-term push to the stock and in the case of Microsoft Inc, most share splits were successful in doing so. The only exception was the 1987 split when the share price on the following day was less than the proportional decrease in the share price due to the split. Specifically, the closing price was $114.50 on 18th September 1987, which should have opened at $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 the 1996 split when the 2:1 stock split implied a $76.39 price on the following day, but it was $81.75, implying a 7% gain just due to the split. It is a known fact that splits do not have any theoretical impact on the balance sheet or the market capitalization of the company but the 1996 split showed that shareholders do give a lot of importance to splits before making investments.
Microsoft Stock Split 2022?
It has been a long time since Microsoft 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 a share split in the last two decades. For example, Amazon had three shares split and all were done in the span of two years from 1998-to 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, which has not given any clue about the next possible split in the last two decades.
In the history, all the splits have come when shares have crossed $100 except in 2003, but this time share price has 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 have a 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 in the tech industry. It is a million-dollar question when Microsoft will announce the 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 has shown that a split can provide short-term positive momentum to the share price.
Will Microsoft stock split in 2022?
While Microsoft is a good candidate for a split, the buzz hasn’t increased over the last 90 days. The next earnings date is on July 26th, 2022. The probability of a split is much higher than at any time in the previous years.
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