Microsoft (MSFT), a giant in the tech industry, has a history of stock splits designed to make its shares more accessible to a wider range of investors. Stock splits happen when a company divides its existing stock into multiple shares, effectively lowering the price per share while keeping the overall value the same for existing shareholders. For example, if you owned one share worth $1,000 and the company announced a 2-for-1 split, you would then own two shares, each worth $500. Microsoft has carried out several stock splits, especially during the late 20th and early 21st centuries. Below is Microsoft's stock split history.
Microsoft stock split history
- September 21, 1987 – 1/2 stock split : This means each share was split into two. If you owned one share before the split, you would own two after, but each would be worth half as much as the original share.
- April 16, 1990 – 1/2 stock split : Another split similar to the 1987 split, doubling the number of shares and halving their price.
- June 27, 1991 – 1/1.5 stock split : In this split, for every share owned, shareholders received one and a half shares. This is a less common split ratio that also effectively lowered the share price.
- June 15, 1992 – 1/1.5 stock split : Repeating the 1991 ratio, this split again increased the number of shares by 50% per share held.
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- May 23, 1994 – 1/2 stock split : Once more, each share was split into two, continuing to make investing in Microsoft more accessible.
- December 09, 1996 – 1/2 stock split : Similar to previous 1/2 splits, this again increased the number of shares available.
- February 23, 1998 – 1/2 stock split : This split followed the trend of previous years, doubling the number of shares.
- March 29, 1999 – 1/2 stock split : Yet another 1/2 split, reflecting the ongoing growth and success of Microsoft.
- February 18, 2003 – 1/2 stock split : The most recent split, again doubling the number of shares.
Each of these stock splits was designed to lower the price per share without changing the overall market value of what shareholders owned, making it easier for more people to buy into Microsoft.
Will Microsoft stock split in 2024?
Predicting whether Microsoft will split its stock in 2024 involves considering various factors, though it's important to note that a stock split is never guaranteed. Historically, Microsoft has split its stock when the price became significantly high to make the shares more accessible and attractive to a broader base of investors. Currently, Microsoft’s stock price hovers around $416, which is substantially higher than its price of $48.30 at the time of its last split in 2003. This significant increase suggests that the conditions might be favorable for another split.
However, while the high stock price points towards a possible split, whether this will happen in 2024 specifically is not certain. Stock splits are strategic decisions made by a company’s board and depend on many variables, including market conditions, company growth, and shareholder interests. Microsoft may consider these factors before deciding to implement a split.
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Why does a stock split make sense for Microsoft?
A stock split could be a sensible move for Microsoft for several reasons:
- Improves accessibility: By lowering the price per share, a stock split makes Microsoft’s shares more affordable to individual investors. This could broaden the investor base, increasing liquidity and potentially stabilizing the stock price.
- Psychological appeal: Lower-priced stocks often appear more approachable to small investors. A lower per-share price, even though it doesn’t change the underlying value of the company, might encourage more investment from individuals who perceive the stock as more attainable.
- Alignment with historical practices: Microsoft has historically used stock splits as a tool to manage the share price perception and ensure that it doesn't become too expensive for average investors. Continuing this practice could maintain investor interest and confidence in the stock’s accessibility.
- Encourages employee participation: For companies like Microsoft, which offer stock options to employees, more accessible stock prices make these compensation packages more attractive and understandable to employees, potentially boosting morale and retention.
Conclusion
In conclusion, while it is plausible that Microsoft might opt for a stock split soon given its current stock price and historical practices, whether this will specifically occur in 2024 is uncertain and depends on various strategic considerations. If the company does decide to split its stock, the move would likely aim to make share ownership more accessible to a broader range of investors, thus enhancing the liquidity and marketability of the stock.
For investors and market watchers, it’s important to focus not solely on the possibility of a stock split but on the company's overall performance and market trends. Stock splits do not change the fundamental value of the company but can affect perceptions and market dynamics. As such, whether you’re an existing shareholder or considering investing, keep an eye on Microsoft’s announcements and broader market conditions that might influence such decisions. Source: investing.com
