Lululemon Athletica to Join S&P 500

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Lululemon Athletica’s stock experienced a significant surge on Monday as investors expressed their support for the company’s upcoming inclusion in the S&P 500 index.

According to S&P Dow Jones Indices, Lululemon (ticker: LULU) is set to commence trading on the index this Wednesday. The stock will replace Activision Blizzard, which was recently acquired by Microsoft (MSFT) in a $69 billion deal that concluded on Friday.

On Monday, shares of Lululemon, the leading exercise apparel company, climbed 9.2% to reach $412.50. Meanwhile, the S&P 500 itself saw a modest 0.8% increase.

Being part of the S&P 500 signifies membership among the largest publicly traded companies in the market. While various criteria must be met for inclusion, including profitability and trade volume, market capitalization typically carries the greatest weight. Dow Jones Indices states that companies must possess an unadjusted market cap of at least $14.5 billion to qualify. The median market cap as of September 29th stood at approximately $30 billion. As of today, Lululemon’s market cap stood at $49.7 billion, firmly positioning it within the index.

The Changing Dynamics of Companies in the S&P 500

In the world of finance, being part of the S&P 500 is considered a prestigious achievement for companies. However, the criteria for admission and retention in this elite group often lead to a cycle of companies entering and exiting. This phenomenon has become more pronounced in recent years, particularly with the rise of tech companies. A study by McKinsey revealed that in the late 1970s, companies in the S&P 500 had an average tenure of approximately 35 years. But by 2019, this average had decreased to around 20 years, indicating the increasing dominance of younger, high-growth companies over their more established counterparts.

One significant advantage a company gains when entering the S&P 500 is a boost to its stock performance. The inclusion in this renowned index not only enhances a company’s credibility but also attracts a larger pool of potential investors. Most notably, passive funds that mirror the S&P 500’s composition are compelled to acquire shares of the newly added company.

Numerous early studies supported the notion that joining the S&P 500 led to a permanent increase in a company’s market value and stock price—results that were often reflected in strong share performance. However, recent data challenges this belief. For instance, a study conducted by the Federal Reserve Bank of New York in 2011 found “no permanent effect” on market value following index inclusion. Furthermore, a 2020 study from Ohio State University revealed that joining the S&P 500 had actually contributed to a “negative impact on shareholder wealth” after the initial surge in stock price.

These findings highlight the evolving dynamics within the S&P 500 and suggest that while inclusion may bring immediate benefits, its long-term effects require further examination. As companies continue to vie for a spot in this prestigious index, understanding the potential implications on their market value and shareholder wealth becomes even more critical.

Lululemon Continues to Soar

Lululemon has experienced a remarkable year of success, with its shares increasing by an impressive 28%. This significant growth has outperformed the S&P’s gain of 13.7%. Experts are confident in the company’s ability to maintain its winning streak.

Impressive Analyst Recommendations

According to FactSet, nearly three-fourths of analysts have given Lululemon a Buy rating. A further 17% of analysts believe it is prudent to Hold the stock, while only 9% have chosen to Sell.


With a strong track record and positive analyst recommendations, Lululemon stands as a promising investment opportunity.

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