Lululemon Athletica stock is on the rise as the active wear company prepares to officially join the benchmark S&P 500 index Wednesday.
S&P Dow Jones Indices announced the inclusion in what is the broadest measure of stocks last week, replacing Activision Blizzard now that the video game maker has been acquired by Microsoft.The deal was recently approved by U.K. regulators, clearing the path for a full U.S. approval.
When companies are added to the S&P, their shares typically rise in the lead-up because of a rise in demand for the stock as mutual funds and other large institutional investors buy up shares to add to their portfolios to match weightings in the benchmark.
Since the announcement, Lululemon shares jumped more than 10% through Monday, reaching $416.01, the highest level since December 2021. The stock remained elevated closing at $412.94 on Tuesday.
The move is also a sign business is solid. The stock is up nearly 30%, giving the company a market capitalization of more than $52 billion.
The athletic apparel maker lifted its third-quarter annual profit for a second time in August, reporting an 11% boost in revenue in the North American market and a 52% surge internationally.
Then in September, Lululemon announced it had entered a five-year partnership with fellow high-end fitness brand Peloton, which made Lululemon the primary apparel provider for the home workout company.
The two brands plan to capitalize on their respective followings.
"Together, the brands will engage their global community of members in the United States, Canada, the United Kingdom, Germany and Australia through technical athletic apparel, real life experiences, special programming, and original content, expanding the brand awareness and reach for both companies. In addition, a select number of Peloton Instructors will become lululemon Ambassadors as part of the partnership" the company stated in the announcement.
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Reuters contributed to this report.
