APPLE IS JOINING THE DOW JONES!!!

This week, Apple Inc., the biggest company in the global economy, is joining Dow Jones Industrial Average and replacing AT&T telecommunications corporation.

The move into Blue-chip index will be effective on March 19, with the replacement to be made on March 18th after the market close.

Apple Inc, the legendary producer of IPhones, IPads and Mac computers line, was incorporated in 1977. It is the world’s second biggest information technology company and the largest corporation in the world by the market capitalization, which is US$ 736 billion presently.

Despite of the fact that Apple is one of the most successful American companies, it was excluded from the Dow Jones up to now as its price was too high and would distort the price-weighted index.

Last June however, the company underwent 7 to 1 stock split, which made it a more appropriate candidate to join the Indicator. At the moment the stock is trading within US$ 125 region.

Looking at AT&T, the US largest provider of fixed telephony and rated 23td largest company in the world in 2014, it did not have exceptional performance since the year 2002, which made it a replacement target. Only last year its share value has dropped 4.6%, with the current price trading just below US$ 33.

Apple’s stock trades at a 272% premium to AT&T’s stock, which it is replacing.

The catalyst for the replacement of AT&T by Apple however, was the Visa 1 to 4 stock split, which will be effective from 19th of March. This move will reduce of the information technology sector in the index and bringing Apple in will restore the balanced presentation and reflect the general market more accurately.

Visa is the highest weighted member of the Index right now with the price of US$ 274

In addition, Apple replacing AT&T will give the index more credibility, as well as adding to the Apple esteem.

Apple Inc. will be the 6th technology related stock among the 30 members of the index. These companies are chosen on the basis of their reputation, past growth records and overall relevance to investors. Dow 30 index aim is to have leading companies from all the sectors of the U.S. economy. Apple will also be the 5th most expensive stock in the index – which means a rather influential member.

Apple Inc. is already included in NASDAQ 100 and S&P 500 indices and is traded under AAPL name.

To contact the author

elena.leonovich@acfs.eu
Senior Market Analyst

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