Amazon and Google owner Alphabet are two of the most dominant companies on Earth. Each is worth more than $1 trillion and is a leader in multiple industries. But neither stock is a member of Wall Street’s most exclusive club: the Dow Jones Industrial Average. That may soon change.
Amazon (AMZN) announced late Wednesday that it plans to do a 20-for-1 stock split at the end of May. While that won’t change the value of the company, it means that one share, which now costs around $2,925, would trade for a little less than $150 based on current prices.
Alphabet announced its own 20-for-1 stock split last month. The split takes effect in July. The price of Alphabet’s most widely available class A shares, trading under the ticker symbol of GOOGL (GOOGL), currently cost about $2,600. So if the split happened today, the price would drop to around $130.
That means that if companies with quadruple digit stock prices were in the Dow, their moves would drastically skew the point value of the index every day. The company that currently has the biggest weighting in the Dow is UnitedHealth (UNH), by virtue of its $480 a share stock price.
One could argue that the only reason Alphabet and Amazon aren’t already in the Dow is because of their prohibitively high stock prices. After all, they are the third and fourth most valuable companies in the S&P 500, trailing only Apple and Microsoft.
Of course, adding Alphabet and Amazon would mean that two current Dow listed companies would have to be removed. There are several logical candidates. Older tech firms Intel (INTC) and IBM (IBM) could be kicked out to make room for Amazon and Alphabet.
Walgreens, however, was just added to the Dow in 2018. It replaced long-time Dow member General Electric. (GE)