Feb 26, 2024 - Economy

How Walmart ushered Amazon into the Dow

Felix Salmon

Illustration of a stock market chart with a door that reads in and one that reads out — Illustration: Sarah Grillo/Axios

Actions have consequences — and a slightly weird stock split from Walmart turns out to have finally been the event that caused Amazon to enter the Dow Jones Industrial Average.

Why it matters: Two separate stock splits were necessary for Amazon to enter the Dow. Its inclusion now means a bit more representation for mega-caps, although Nvidia, Alphabet, Meta, and Berkshire Hathaway are all still missing.

How it works: Stocks in the Dow are weighted by their nominal share price, not their market value.

When Walmart did its 3-for-1 stock split, I worried that the action didn't "seem to make a lot of sense — especially given that the split is going to significantly dilute Walmart's contribution to the Dow Jones Industrial Average."
Turns out, S&P Dow Jones Indices, which administers the Dow, had the same worry. To maintain a sensible level of consumer retail in the average, they needed another stock alongside Walmart.
Helpfully, Amazon had done its own stock split back in 2022. Before then, its shares were trading at almost $3,000 each, effectively making the company ineligible for the Dow. Now, however, Amazon shares are trading at about $175 apiece, which is well within the Dow range. (UnitedHealth Group, also in the Dow, trades for more than $500 per share.)

The bottom line: The Dow is silly.

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How Walmart ushered Amazon into the Dow

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