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Microsoft stock split: MSFT stock price fall may scupper hopes of imminent 10th dilution

By Manaswita Ghosh Dutta

Edited by Jekaterina Drozdovica

09:28, 4 November 2022

The distinctive Windows logo on signs at Microsoft Canada head office building in Mississauga
MSFT stock price fall may scupper hopes of imminent 10th dilution Photo: sockagphoto / Shutterstock

Microsoft (MSFT) stock hasn’t fared well so far in 2022, largely owing to the decline in demand for its products as the personal computers (PC) market has experienced a slowdown. The stock’s poor performance this year is also attributed to higher inflation and monetary policy tightening.

During over three decades since going public, the software producer has split its shares 10 times, with almost three decades since the latest stock split

Is it time for MSFT to follow other tech behemoths, including Alphabet (GOOGL) and Amazon (AMZN), in diluting its shares, or is another Microsoft stock split less likely in the current macroeconomic environment?

What is Microsoft?

Microsoft is a Washington-based technology company and the world’s largest software maker. The company produces a wide range of products and offers services such as cloud computing, computer and gaming hardware, video games, and search engine.

Some of its popular products include Microsoft Windows operating systems, the Microsoft Office suite, and the Internet Explorer web browser.

The company went public on 13 March 1986. Microsoft offered 2.5 million shares at $21 a share – the price hit $35.50 before the end of the first trading session. The company raised $61m in its initial public offering (IPO). Microsoft's fiscal year is from 1 July to 30 June.

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Microsoft stock analysis: Historical view

Since its IPO in 1986, MSFT stock has produced returns of 75,962%, as of 3 November. The first major bull run was between 1997 and 1999 during the dotcom bubble, when the share price surged over 400% in two years. A crash, however, was imminent with MSFT reversing the gains and adjusting to a more sustainable growth pace. 

Over the last five years, the Microsoft stock price has risen 162%, as of 3 November, 2022, outperforming the Dow Jones (US30), S&P 500 (US500) and the tech-laden US Tech 100 (US100).

The tech giant’s share price accelerated in 2020, when working-from-home boosted demand for Microsoft’s products. The stock surged 100% between March lows and the record high of $349.67 intraday, achieved on 20 November. 

MICROSOFT STOCK PRICE 2017-2022

Microsoft stock declines on lower demand

It’s been a different story this year as investor sentiment has shifted towards risk-off amid fear of recession, aggressive monetary tightening to combat four-decade high inflation and Russia’s invasion of Ukraine. MSFT stock has fallen 31% year-to-date and 37% since the record high. 

Furthermore, the falling PC demand hit the tech giant along with other component makers including Advanced Micro Devices (AMD) and Nvidia (NVDA). Credit risk and research agency CreditSights noted:

NVDA

129.88 Price
+2.170% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.13

TSLA

249.14 Price
+4.260% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.19

AMD

181.99 Price
+0.360% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.18

AAPL

230.23 Price
+1.090% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.11
“Growth is slowing as even Microsoft is not immune to macro headwinds which are impacting its Windows, Surface, and advertising-related businesses, and causing a deceleration in Azure growth rates.”

According to tech research company Gartner, PC shipments declined 19.5% to 68 million units in the third quarter of 2022 on an annual basis. Mikako Kitagawa, director analyst at Gartner, said:

“While supply chain disruptions have finally eased, high inventory has now become a major issue given weak PC demand in both the consumer and business markets…On the business side, geopolitical and economic uncertainties led to more selective IT spending, and PCs were not at the top of the priority list.”

Microsoft’s latest earnings report showed that the company's net income decreased 14% to $17.56bn in the three months ended 30 September, from $20.51bn a year earlier. The decline came as consumers spent more time outdoors rather than at home. 

Microsoft stock split history since IPO

In almost four decades since its listing, Microsoft has split its stock nine times, the last one carried out almost twenty years ago, on 14 February 2003. Out of the nine stock splits in Microsoft split history, seven were 2-for-1 and two were 3-for-2.

  • 2:1 stock split on 18 September 1987

  • 2:1 stock split on 12 April 1990

  • 3:2 stock split on 12 June 1992

  • 2:1 stock split on 20 May 1994

  • 2:1 stock split on 6 December 1996

  • 2:1 stock split on 20 February 1998

  • 2:1 stock split on 26 March 1999

  • 2:1 stock split on 14 February 2003

A stock split is when a company raises the number of its shares while reducing the price of an individual share. The action essentially does not affect the company’s market capitalisation, but the lower price can result in higher liquidity and raise investor enthusiasm. A split is typically carried out to make the stock more affordable to investors.

For example, if a company's shares are valued at $100 and an investor has 100 shares, their total investment is worth $10,000. If the company then splits its stock by two, known as a 2-for-1 stock split, the investor will own 200 shares worth $50 each. The value of the investor’s holding will be unchanged.

MSFT stock split prediction doesn’t materialise 

In 2022 alone, major US companies, including Amazon, Tesla (TSLA) and Google-parent firm Alphabet, carried massive stock splits in an attempt to make their shares more attractive for investors. Amazon and Alphabet, for example, split their stocks 20 for 1, meaning the shares became 20 times more affordable. 

This prompted some commentators to speculate that a MSFT stock split is likely in 2022, a bet that didn’t materialise as late as November. 

Taking into account the company’s stock performance, Violeta Todorova, senior research analyst at Leverage Shares, noted: 

“We expect further weakness to unfold in the short-term as investors are resetting expectations. Although, we don’t think this is the start of a multi-quarter painful guidance reduction cycle, and we do continue to like the stock over the long-term, neither fundamentals, nor technicals are suggesting that the current down trend is approaching an inflection point.”

Final thoughts 

Will Microsoft split its stock in the near future? We do not know. The share price is troubled amid a bearish market environment. A Microsoft stock split decision would be carried out by the firm’s executive team. 

Note that analysts can be wrong. Their forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before trading, looking at the latest news, a wide range of analyst commentary, technical and fundamental analysis on the stock. Keep in mind that past performance does not guarantee future returns. And never trade money that you cannot afford to lose.

FAQs

When was the last time Microsoft stock split?

The last Microsoft stock split was carried out on 14 February, 2003. The 2 for 1 split led to a closing price of $24.96.

How many times has Microsoft stock split?

To date, Microsoft stock has undergone nine stock splits.

Will Microsoft stock split again?

Although some investors expected a Microsoft stock split in 2022, the company has not announced one.

Markets in this article

AMD
Advanced Micro Devices Inc (Extended Hours)
181.99 USD
0.65 +0.360%
GOOGL
Alphabet Inc - A (Extended Hours)
184.71 USD
-1.25 -0.670%
AMZN
Amazon.com Inc (Extended Hours)
194.35 USD
-0.92 -0.470%
NVDA
NVIDIA Corp (Extended Hours)
129.88 USD
2.75 +2.170%
US500
US 500
5615.4 USD
27.5 +0.490%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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