By CCN.com: In case you missed it, Microsoft is now a $1 trillion company. The tech giant’s better-than-anticipated third-quarter earnings sent the stock soaring over the top, catapulting the 44-year old company into the coveted $1 trillion-club that counts Jeff Bezos’ Amazon among its members.
Microsoft didn’t get there overnight – a then 30-year-old Bill Gates brought the company public in 1986 (a decade before Amazon) at $21 per share, raising $61 million. That price was higher than Gates sought. Oddly enough, he shied away from a valuation of more than half-a-billion dollars in favor of something more conservative. Hate to tell you, Bill, but your baby has just surpassed another threshold that even you couldn’t have seen coming.
“The biggest winner was William H. Gates III, the company’s co-founder and chairman. He got only $1.6 million for the shares he sold, but going public put a market value of $350 million on the 45% stake he retains. A software prodigy who helped start Microsoft while still in his teens, Gates, at 30, is probably one of the 100 richest Americans.”
Many savvy Microsoft investors are laughing all the way to the bank now that the valuation has ballooned to $1 trillion. Microsoft is one of those early tech stocks that has continued to generate returns hand-over-fist for everyone from the average Joe to the biggest institutional investors who can thank Gates for dreaming up the company in his Albuquerque garage. So whose getting richer? On the institutional side, it’s Vanguard, BlackRock, and StateStreet, which are the top trio of institutional holders. But it’s Microsoft C-Suite, including both current and former executives, that are the most interesting.
Microsoft has experienced nine stock splits since the stock went public, the most recent of which was in 2003. If they hadn’t, Microsoft’s stock would have become too rich for the blood of many investors, placing it in the company of Warren Buffett’s Berkshire Hathaway.
Hindsight is 20/20, but if you or your parents had been astute enough to pour $1,000 into the Microsoft IPO, you’d be sitting pretty right about now. Accounting for “price appreciation and dividends,” the size of your portfolio would have been $1.6 million in November 2018 when Microsoft’s stock was trading at about $104. With shares now hovering at $130, you’d be raking in even more.
Microsoft is a tech giant that despite its massive size has remained nimble enough to change with the times. Its move to the cloud is a prime example of this, proving that the decades-old company can still expand into new markets and capture key market share in the interim. While companies like Microsoft come along as frequently as once in a long while, you might still have a shot at capitalizing on the next trillion-dollar mark.
Last modified: September 23, 2020 12:39 PM