Tech

Amazon stock split could set it up for being included in the Dow Industrials

Key Points
  • Amazon's 20-to-1 split makes it more palatable to the price-weighted Dow Industrials.
  • Perhaps the Dow index committee may consider giving Walgreens the boot from the index as that company reevaluates its Boots unit.
  • On top of Amazon and Alphabet, which had its own 20-to-1 split back in February, Nvidia could be waiting in the wings too.

In this article

A sign hangs from a fence at Metropolitan Park, the first phase of new construction of Amazon's HQ2 development, in Arlington, Virginia, October 13, 2021.
Kevin Lamarque | Reuters

Mega cap tech stocks are shedding their mega share prices with huge stock splits.

First came Alphabet back in February with its 20-for-1 stock split. Then, on Wednesday, Amazon made its move with its own 20-for-1 stock split.

Amazon's stock price would have closed today at a split-adjusted price of $139.28. Just as with Alphabet, Amazon's stock split makes the e-commerce giant's stock more palatable as a component in the price-weighted Dow Industrials. At the split-adjusted price, Amazon would have the 12th-smallest weighing among the 30 stocks, which would put it right in the middle of the pack — an identical weighting to Walmart. But unlike Walmart, which is a Consumer Staples stock, Amazon is in the Consumer Discretionary sector.

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Perhaps the Dow index committee may consider giving Walgreens the boot from the index as that company reevaluates its Boots unit. And although Walgreens is a Consumer Staples stock, replacing it with Amazon would still give the consumer retail good representation. Walgreens is the second-least-influential stock in the price-weighted index, sitting at $48.

On top of Alphabet and Amazon, Nvidia could be waiting in the wings too. The chipmaker split its stock 4-for-1 back in July, and its price is now sitting at $230. If added to the index, Nvidia would have the sixth-largest weighting in the Dow – far more than the Dow's least impactful stock, fellow competitor Intel, which is sitting under $48.

Other techs that could remain vulnerable include Cisco, the fourth-least-influential stock in the index, and IBM, which has the eighth-smallest weighting and has now completed the spin-off of its Kyndryl-managed infrastructure unit.

The last major tech company to join the Dow was Apple, which was added in March 2015, a mere nine months after completing a 7-for-1 split, the fourth split in its history. (It since completed another 4-for-1 split in 2020.)

It's over to you now, Dow committee…