Apple’s stock split will curtail its huge influence on the Dow

The white Apple logo is seen on a glass wall at an Apple store in Brooklyn, New York
Apple’s stock split, effective Aug. 31, will lead some money managers to sell shares as they adjust to mimic the Dow Jones industrial average’s makeup.
(Mary Altaffer / Associated Press)

Apple Inc.’s planned stock split will diminish its influence on the Dow Jones industrial average — a big shift, as the iPhone maker’s 100% surge since its March lows lifted the price-weighted measure nearly back to an all-time high.

At its current price of about $452 a share, Apple has the biggest weighting in the index: 11%. A 4-to-1 split now would drop its price to about $113 a share and send its ranking in the Dow down to 16th. Apple has rallied almost 55% in 2020, adding more than 1,100 points to a stock measure that overall has fallen about 2% during that time.

The split is scheduled to take effect Aug. 31.

In a world where passive investing rules the stock market, a drop of weight in an index such as the Dow is likely to prompt outflows from money managers who mimic benchmark changes. About $31.5 billion was either indexed or benchmarked to the gauge at the end of 2019, according to data from S&P Dow Jones Indices.


A stock split “is an appeal to retail,” said Charles Day, a UBS managing director and private wealth advisor with more than $600 million in assets under management. “It will make a difference for the Dow.”

The split, however, won’t affect Apple’s No. 1 position in the S&P 500, an index that’s weighted by market capitalization rather than stock prices.

Apple has rallied the most in the Dow this year as people restricted from visiting friends and relatives snapped up new iPhones, iPads and Mac computers to stay connected during the pandemic. While any selling as a result of the weighting change may pale in comparison to the company’s market value of $1.9 trillion, it’s not good news for a stock whose relentless gains are stirring angst at a time when tech shares have lagged behind the market over the last month amid valuation concerns.

Apple’s stock split is “theoretically decreasing demand from passive indexers,” Julian Emanuel, chief equity and derivatives strategist at BTIG, wrote in a note. “Combined with a generalized loss of momentum in the Nasdaq 100, [Apple shares] could succumb to Newton’s Law of Gravity in the weeks ahead.”