Today Microsoft (MSFT) closed up 2.08%. The NASDAQ 100 was ahead just 0.51% and the Standard & Poor’s 500 gained only 0.13%. The gains took Microsoft shares to a record intraday high of $297.35.
Why the extra pop in Microsoft shares?
Because today Microsoft raised the price of its Microsoft 365 productivity suite (Word, Excel, PowerPoint, Teams, Outlook and Enterprise Mobility) by as much s 20%, effective March 1.
The price increase is the first since the launch of Office 365 ten years ago.
The price increase is a big deal to investors because 1) it’s a reminder of how throughly Microsoft dominates the office productivity market, 2) the company is raising prices by a substantial amount in an economy still recovering from the Pandemic Recession of 2020, and 3) the price increase in Microsoft’s legacy cash-cow business will put a huge amount of cash in the company’s coffers that it can use to fuel its continued drive into cybersecurity, cloud services, and plans for its own server chips. The Microsoft 365 suite had sales of $53.9 billion in the 2021 fiscal year that ended in June. That’s almost one-third of Microsoft’s total $168 billion in sales.
Today’s gains also come as action in Microsoft Call Options argues that investors think the stock is headed higher. The September 17 Call Options with a strike price of $285 (MSFT210917C00285000) gained another 50.46% today.
I own Microsoft Call Options in my personal portfolio. Microsoft is a member of my Jubak Picks Portfolio where the position is up 192.6% since I added the stock on June 14, 2018.