What Walmart's 1970 IPO Can Teach Today's SpaceX Investors

A $1,000 stake in Walmart at its 1970 IPO would now be valued at roughly $38.9 million, making it the top-performing US IPO ever by return.

That outcome is remarkable given Walmart's IPO was minuscule compared to today's norms, raising under $5 million. SpaceX, whose June IPO was the largest in US history, raised tens of billions. The question is how a small IPO generated such a massive return.

How Stock Splits Made $1,000 Worth $38.9 Million

Walmart went public in October 1970, issuing 300,000 shares at $16.50 apiece to raise $4.95 million. The stock has appreciated greatly over 56 years, but the current share price alone does not capture the full picture. Stock splits are the crucial factor.

In a stock split, investors receive additional shares while the overall value of their holding stays unchanged at the time of the event. For instance, a two-for-one split doubles the number of shares a person holds.

Since its IPO, Walmart has executed 12 stock splits. Consequently, a single share purchased in 1970 now represents 6,144 shares.

“The figure most people quote for these companies is wrong, and it is wrong in the same direction every time… The real number is closer to 3,885,000%, and the whole gap is twelve stock splits the arithmetic dropped,” said a Taurex market analyst in the report.

Coca-Cola illustrates the same phenomenon even more dramatically. A single Coca-Cola share purchased at its 1919 IPO has multiplied into 9,216 shares following 11 stock splits. Those shares are currently valued at about $830,000.

Nvidia's Earnings Already Reshuffled the Rankings

The study placed Nvidia fifth based on its August 26 close of $209.66, where a $1,000 stake would be worth $8.39 million.

Nvidia's Q2 earnings report indicated revenue of $96.2 billion, a 106% year-over-year increase, with data center sales climbing 117%. The stock subsequently rose 8.7%.

With NVDA trading around $226 on Friday, that initial $1,000 stake is now worth about $9 million, allowing Nvidia to surpass McDonald's. It remains roughly $350,000 behind Home Depot.

A ranking built over 56 years changed in a single trading session.

Lessons for SpaceX and Anthropic Investors

The highest IPO return does not indicate the fastest growth rate. Nvidia's annualized compound return was about 39%, while Walmart's was 21%. Walmart's edge came from having 56 years to compound.

The challenge lies in holding shares for such a long period. Nvidia's IPO occurred only 14 months before the dot-com crash, which ultimately erased nearly 80% of the Nasdaq.

The ranking has three significant limitations:

• Dividends paid over decades by companies like Coca-Cola, McDonald's, and Walmart are not included.
• It assumes purchases at the IPO price, a privilege unavailable to most retail investors.
• It only includes companies that survived to become winners.

Even Walmart experiences poor weeks; its stock dropped nearly 6% last week following a rare sales miss.

For current IPO investors, the key question is performance over the coming decades. SpaceX set its IPO price at $135, opened at $150, and its record IPO valued the firm at over $2 trillion.

Anthropic may follow this autumn with an even larger fundraising effort.

Neither company has executed a stock split yet. Walmart's history illustrates why that could become significant later.