Microsoft’s 40-Year IPO Anniversary: What If You Invested $10K Back Then? Here’s How Much You’d Be Worth Today.

Imagine it’s March 1986. You’re a 25-year-old who just inherited $10,000 from an affluent relative and are considering different ways to invest that money. Before making any hasty decisions, you reach out to a college friend now working as a stockbroker. He offers a daring suggestion: invest in a small Seattle-based software company that’s about to go public — Microsoft.

The IPO Invitation

On March 13, 1986, when Microsoft debuted on the stock market, the excitement on the trading floor was palpable. Originally set at $16, the opening price surged to $21 just before trading commenced, ultimately closing the day at $27.75. This debut transformed the lives of founders Bill Gates and Paul Allen, as well as early executive Steve Ballmer.

Now, imagine if you had heeded your friend’s advice and invested that $10,000 in Microsoft shares at the IPO. How would your fortune look today after navigating the dot-com crash, the 2008 financial crisis, and decades of technological advancement?

Growth Through Stock Splits

Investing at the initial offering price of $21 per share would secure you 476 shares of Microsoft. However, the company has undergone nine stock splits over the years:

• Initial Purchase (March 13, 1986): 476 shares purchased.
• Split 1 (September 21, 1987): A 2-for-1 split doubles your shares to 952.
• Split 2 (April 16, 1990): Another 2-for-1 split brings you to 1,904 shares.
• Split 3 (June 27, 1991): A 3-for-2 split increases your total to 2,856 shares.
• Split 4 (June 15, 1992): A second 3-for-2 split raises your holdings to 4,284 shares.
• Split 5 (May 23, 1994): Another 2-for-1 split pushes your shares to 8,568.
• Split 6 (December 9, 1996): A further 2-for-1 split increases your count to 17,136 shares.
• Split 7 (February 23, 1998): Another 2-for-1 split takes you to 34,272 shares.
• Split 8 (March 29, 1999): A final 2-for-1 split doubles your holding to 68,544 shares.
• Split 9 (February 18, 2003): The last 2-for-1 split brings your total to 137,088 shares.

Thanks to these splits, your initial investment of 476 shares has become a remarkable 137,088 shares. With Microsoft’s current trading price around $404 per share, your investment would value approximately $55,383,552.

The Dividend Effect

Microsoft did not issue dividends for its first 17 years as a public company, but it began in 2003. Suppose your broker had enrolled you in a dividend reinvestment plan (DRIP), allowing dividends to automatically purchase more shares.

As a result, you would now hold about 220,000 shares of Microsoft. With today’s price per share at $404, your investment from 1986 would now be valued at $88,880,000.

Additionally, with a current annual dividend rate of $3.64 per share, your holdings would provide approximately $800,800 in passive income each year. This means an astounding $88 million in net worth and a substantial annual income, all stemming from a single $10,000 investment made four decades ago.