There could be another reason behind Nvidia’s stock split

Nvidia headquarters in Santa Clara, California, on Tuesday, Feb. 23, 2021.
David Paul Morris | Bloomberg | Getty Images

Nvidia announcing a 4-for-1 stock split on Friday could have some significant ramifications.

Just like with Apple a few years ago, could this stock split finally open the door for the company to to join the Dow Jones Industrial average?

Currently, UnitedHealth — which has a share price above $400 — has the greatest weighting in the Dow. That's because the Dow is a price-weighted index, giving higher-priced stocks more influence.

At Nvidia's current pre-split price, it wouldn't be very feasible for it to join the Dow, since it would have a very disproportionate impact on the index. But at a post-split $150 price – the story is very different. At that level, it would be right in the middle of the pack in terms of its index weighting.