Dow Jones Welcomes Amazon Today, But Analyst Raises Historical Caution For E-Commerce Stock: Should Investors Be Worried?

Amazon.com Inc AMZN is set to replace Walgreens Boots Alliance, Inc. WBA in the Dow Jones Industrial Average (DJIA) before Monday’s market open. This move has sparked concerns among some investors. 

What Happened: Charlie Bilello, Chief Market Strategist at Creative Planning, highlighted a potential historical precedent that might not augur well with investors betting on the e-commerce giant’s stock.

Bilello shared a chart on Twitter showing that Walgreens’ stock price dropped 58% since its addition to the DJIA in June 2018, while the index itself and the company it replaced, General Electric, both gained significantly. 

See Also: Everything You Need To Know About Amazon Stock

Why It Matters: This raises concerns about potential negative performance for Amazon after entering the Dow.

However, it’s crucial to remember that past performance is not necessarily indicative of future results. 

Amazon has strong fundamentals, including a leading position in e-commerce, a robust cloud computing business (AWS), and a vast global reach. Additionally, Amazon’s 2023 performance and 2024 gains suggest continued momentum.

The decision to add Amazon reflects the evolving nature of the American economy and aims to increase the DJIA’s exposure to consumer retail, while Walmart‘s recent stock split necessitated its weighting adjustment. Amazon currently sits as the fifth most valuable company globally, boasting a market cap of $1.817 trillion.

In premarket trading on Monday, Amazon shares edged down 0.05% to $174.90, according to Benzinga Pro data.

Read Next: Jeff Bezos Sells Another $2B Worth of Amazon Shares, Now Holds 9.3% Stake: What Investors Should Know

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