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, putting it right in the middle of the pack — ironically, an identical weighting to Walmart. But unlike Walmart, which is a Consumer Staples stock, Amazon is in the Consumer Discretionary sector.
Perhaps the Dow index committee may consider giving Walgreens the boot from the index as that company re-evaluates 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 2nd 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 6th 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 4th least influential stock in the index, and IBM which has the 8th 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 Mar. 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…
