Apple will be joining the Dow Jones Industrial Average taking wireless carrier AT&T’s spot on the famed stock market index, CNBC reports. The change will take place in just under two weeks at the end of trading on March 18th. The Dow is heavily viewed as being indicative of the overall stock market performance in the United States, and Apple’s rising stock price will soon be a significant factor to that number.
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Barron’s: Apple could join Dow index, would have to split shares
A new report from business weekly Barron’s (via Reuters) claimed The Dow Jones Industrial Average stock index could potentially replace stocks from Alcoa, Bank of America, or Hewlett-Packard with Apple or Google. There’s no exact timeframe for the overhaul of the index, but Barron’s said adding the companies would be complicated due to the fact the Dow calculates the absolute price of shares. Reuters explained that getting Apple would require the company to split its shares:
Apple, whose shares on Friday closed at $603, would overwhelm the index with a 26 percent weighting. That is double the influence of current Dow component IBM, whose $207 stock price gives it a 12 percent weighting in the index, Barron’s said.
Barron’s said the heavy weighting that Apple would command at its current share price could prove a barrier to becoming a Dow component. To guarantee a Dow spot, Barron’s said, Apple would have to split its shares by five-for-one or 10-to-one. But Barron’s noted that Apple has not split its stock since 2005.