Amazon and Uber to Join Dow Jones Index in Major Shake-Up
In a significant turn of events, Amazon.com is set to join the Dow Jones Industrial Average, replacing Walgreens Boots Alliance, in the first change to the 30-stock index since 2020. Adding to the shake-up, Uber Technologies will replace JetBlue Airways in the Dow Jones Transportation Average. Both changes are scheduled to take effect on Feb. 26.
Amazon’s inclusion in the prestigious Dow Jones Industrial Average became possible due to a 20-for-one stock split in 2022, which lowered its stock price and made it eligible for the price-weighted index. Speculation about Amazon joining the Dow has been circulating ever since the split occurred.
The departure of Walgreens from the Dow does not come as a surprise, given the significant decline in its stock price over the years. The company’s minimal influence in the Dow, combined with its notably low market value of under $20 billion, made its removal from the index inevitable.
Following the news, Amazon shares rose by 1.4% in after-hours trading to $169.44, after experiencing a 1.4% decline during regular trading. Conversely, Walgreens shares dropped by 3.2% in after-hours trading to $21.60, despite gaining 1.5% in regular trading just a day earlier.
While the Dow industrials possess substantial popularity among the general public, institutional investors have shown limited interest in the index. Therefore, the impact on index funds is not expected to be significant.
The last time the Dow industrials saw a change was in August 2020 when Salesforce, Amgen, and Honeywell International joined the index, replacing Exxon Mobil, Pfizer, and Raytheon Technologies (now known as RTX). Walgreens was added to the Dow industrials in 2018 but has since experienced a disappointing performance, making it one of the weakest stocks in the index’s history.
There has been speculation that other major players, such as Alphabet, Berkshire Hathaway, Meta Platforms, and Nvidia, could potentially make their way into the Dow industrials. However, they are yet to secure their spots in the prestigious index.
Analyst comment
Positive news: Amazon and Uber joining the Dow Jones Index signify their growing influence and success. This change is expected to have a positive impact on their stock prices and reflect a shift towards more innovative companies in the index. The news may attract investor interest and potentially lead to further changes in the future.
