Microsoft went public in 1986 with an initial share price of only $21. Today, the company is the third largest in the world, with a total market cap of $2.10 trillion.
This means early investors in Microsoft have gained tremendous profits. So you might wonder: If you bought Microsoft at the IPO, what would you have made?
In this post, we'll give a detailed answer to this question.
What Would You Have Made If You Had Invested $1000 in Microsoft at the IPO?
When Microsoft went public, the price of a share was $21. At the moment of writing these words, the share value equals $245.42.
That way, if you had invested $1000 at the time of IPO, you'd have made around $2.5 million. This is a 245320% accumulated return over 36 years.
How Have Microsoft Shares Gained Their Incredible Value over Time?
Here is the story behind the remarkable growth of Microsoft shares value:
The Early Stage: Massive Growth for 11 Years
Microsoft was founded in 1975 by two high school students, Paul Allen and Bill Gates.
The company's first product was developing a programming language called BASIC, which was so popular in the early age of PCs.
By the end of 1978, the company had achieved over $1 million in sales. Two years later, Microsoft invented the MS-DOS operating system that went viral to be used by almost all IBM PCs then.
The Initial Public Offering (IPO)
On the 13th of March 1986, Microsoft went public. Despite offering only 2.5 Million shares, the demand for the company shares was higher than the supply.
So, the company increased the number of shares provided to meet the demand. That way, Microsoft sold more than 3 million shares on the first trading day.
Post-IPO: Microsoft Kept Up Its Expansion
After holding the IPO, Microsoft kept its spot at the top of the world's tech companies. To do so, the company launched Windows 2.0.
That operating system made the company the largest software company in sales by the end of 1987.
Microsoft launched many successful products throughout the following years, including Windows 95 and Xbox. These gainful products expanded the company's scope and boosted its profits.
The company also encountered many setbacks, like the antitrust charges the government imposed on the company in the 90s.
However, the tech giant managed to overcome these obstacles with the minimum possible losses.
Microsoft in the 2000s and Beyond
In the 2000s, Microsoft launched a bunch of unsuccessful products on top of them: Windows Vista and Zune music player.
Still, these failed products were only a small portion of the total products. Most of the products were considerably lucrative.
In 2014, the Indian Satya Nadella was named the company's CEO. Since he took over the role, the company has grown dramatically.
As a result, the value of the shares has tripled. This growth was driven by many profitable initiatives Nadella led. Here are a few of them:
- Introducing cloud computing services: Azure
- Acquiring the professional platform LinkedIn
- Acquiring the code-sharing platform GitHub
If you bought one share of Microsoft at the IPO, you would have made $70,680. This is because Microsoft is the third-largest company in the world today.
The company started making exponential profits way earlier than its IPO. It continued to dominate and grow in the tech market for decades.
As a result, the value of its shares highly increased over time.
The information in this article is well-researched and factual. Still, it contains opinions also, and IT IS NOT FINANCIAL ADVICE and should not be interpreted as such, do not make any financial decisions based on the information in this article; we are not financial advisors. We are journalists. You should always consult with a professional before making any investment decisions.