— -- A: General Electric has been a great stock for investors and historians.
Unlike stocks that vanish due to the companies merging or going out of business, General Electric has had staying power. There aren't many stocks that have been trading on the New York Stock Exchange since June 23, 1892, as GE has. And for that reason, GE makes for an interesting study in market history.
Answering your question, takes a few steps. First, we need to find out how much the stock traded for on its first day. That information is provided by GE on its website in the frequently asked questions, or FAQ, section. GE says 50 shares of the stock traded for the first time at $108 a share. So, your initial investment, if had you bought one of those first shares of GE, would have been $108.
A single share of GE currently trades for about $40. Does that mean you've lost $68? Not at all. You can't compare GE's stock price in 1892 with its stock price today because GE stock has split nine times. A stock split lowers the per- share stock price by issuing additional shares to existing shareholders. There is a history of GE's splits at the FAQ link above.
To compare the stock price today with the original price, we must convert the old stock price to a split-adjusted price. That's done by dividing the old stock price by split levels, such as 4-for-1, for each of the splits.
For example, the first split in 1926 was 4:1. Dividing $108 by 4 puts the price of each of those four post-split shares at $27. The next split, in 1930, was also 4:1. That puts the price of each of your shares at $6.75. And so on.
When you do all the math, you find GE's 1892 stock price in split-adjusted terms is 2.3 cents. So, when you compare that price to today's stock price, you GE's stock has gained more than 170,000%, handily outpacing inflation.
Another way to look at this, which may address what you're asking more directly, is by putting today's GE stock price into 1892 terms. Here, we take the current price and multiply by the split factors. When we do this, we find your original investment in GE stock would be $184,320 had the company not split its shares.
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