{"id":73267,"date":"2023-10-16T13:56:24","date_gmt":"2023-10-16T17:56:24","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/lululemon-stock-to-join-the-sp-500-what-that-means-for-the-shares\/"},"modified":"2023-10-16T13:56:27","modified_gmt":"2023-10-16T17:56:27","slug":"lululemon-stock-to-join-the-sp-500-what-that-means-for-the-shares","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=73267","title":{"rendered":"Lululemon Stock to Join the S&P 500. What That Means for the Shares."},"content":{"rendered":"
\n
<\/p>\n

<\/p>\n

<\/p>\n<\/figure><\/div>\n

\n Lululemon Athletica\u2019s
\n stock was surging Monday as investors rallied behind the news that it would soon join the
\n S&P 500.<\/span>\n <\/p>\n

\n Lululemon
\n (ticker: LULU) will start trading in the index on Wednesday, \u00a0S&P Dow Jones Indices said late Friday. The stock replaces Activision Blizzard now that it has been acquired by
\n Microsoft
\n (MSFT). The $69 billion deal closed on Friday.<\/p>\n

\n

Shares of
\n Lululemon,<\/span>
\n the exercise apparel company, were gaining 9.2% to $412.50 on Monday. The S&P 500 was up 0.8%. <\/p>\n

The S&P 500 represents 500 of the largest publicly traded companies. While there are several criteria a company needs to meet to join the index\u2014including profitability and trade volume\u2014market capitalization tends to weigh the heaviest. According to Dow Jones Indices, companies must have an unadjusted market cap of at least $14.5 billion to be included. The median market cap as of Sept. 29 was about $30 billion. Ahead of Monday\u2019s trading session, Lululemon\u2019s market cap was $49.7 billion. <\/p>\n

Because there are certain criteria that companies need to meet to join\u2014and remain\u2014in the S&P 500, it\u2019s common for their stocks to cycle in and out. That has accelerated as newer companies\u2014especially in the tech space\u2014have grown at a fast clip. In the late 1970s, the companies in the S&P 500 had an average tenure of about 35 years, according to a McKinsey study. By 2019, the average tenure was closer to 20 years, the firm found, as younger companies outperformed more established players. <\/p>\n

Stocks often get a bump when they join the S&P 500. Not only does the inclusion lend the company additional credibility, it also exposes the stock to more buyers. These are chiefly passive funds that track the S&P 500, which will now need to pick up shares of the new company. <\/p>\n

Early studies found that index inclusion led to a permanent increase in a companies\u2019 market value and stock price\u2014something reflected in Monday\u2019s share performance.<\/p>\n

But recent data suggest otherwise. A 2011 study from the Federal Reserve Bank of New York argued that there was \u201cno permanent effect\u201d on market value after joining the index. A 2020 Ohio State University study found that after the initial jolt to the stock price, joining the S&P 500 has actually had a \u201cnegative impact on shareholder wealth.\u201d<\/p>\n

Still Lululemon has had a strong run this year. The shares are up 28%, outperforming the S&P\u2019s 13.7% gain. Analysts believe the company can keep up its winning streak. Close to three-fourths of analysts have a Buy rating on the stock, 17% rate it a Hold, and 9% have a Sell rating, according to FactSet. <\/p>\n

Write to Sabrina Escobar at sabrina.escobar@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Lululemon Athletica\u2019s stock was surging Monday as investors rallied behind the news that it would soon join the S&P 500. Lululemon (ticker: LULU) will start trading in the index on Wednesday, \u00a0S&P Dow Jones Indices said late Friday. The stock replaces Activision Blizzard now that it has been acquired by Microsoft (MSFT). The $69 billion […]<\/p>\n","protected":false},"author":1,"featured_media":73268,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-73267","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nLululemon Stock to Join the S&P 500. 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