Why Intel shares slipped today

Shares of Intel (NASDAQ:INTC) dropped today in response to Friday's after-hours news that it would be removed from the Dow Jones Industrial Average and replaced by rivals Nvidia.

The news was expected after Nvidia split its shares in June, but still marks the end of an era for Intel, which has been part of the Dow for 25 years.

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As of 11:16 a.m. ET, shares of Intel fell 3.2% on the news.

Intel's exit from the Dow has no real impact on business, but will cause exchange-traded funds (ETFs) that track the Dow to sell the stock when the Dow turns on November 8th. That's not as significant as getting out of it S&P 500 Since not as many ETFs follow the Dow, this still results in more supply and less demand.

Additionally, the Dow Jones decline signals the company's diminishing importance in the chip sector, which Intel once dominated. Nvidia overtook the company in market capitalization in 2020 and is now more than 30 times more valuable than Intel, showing how quickly the two companies' fortunes have changed.

Intel just reported third-quarter earnings, and investors largely liked what they saw this quarter as the stock rose despite weak results.

Total revenue fell 6% to $13.3 billion and it reported an adjusted loss of $0.46 per share, compared with earnings per share of $0.41. One-time impairments contributed to a portion of this deficit.

However, investors were encouraged by fourth-quarter guidance that called for sequential revenue growth and a return to adjusted profit.

Three months after Intel announced a major restructuring, the stock still has a lot to prove, but shares have fallen so much that there is significant upside potential if the company can implement its restructuring plan.

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