Lululemon Stock to Join the S&P 500. What That Means for the Shares.

Lululemon shares rally with the stock set to begin trading in the index on Wednesday.

Lululemon Athletica’s stock was surging Monday as investors rallied behind the news that it would soon join the S&P 500.

Shares of Lululemon, the exercise apparel company, were gaining 9.2% to $412.50 on Monday. The S&P 500 was up 0.8%. Because there are certain criteria that companies need to meet to join—and remain—in the S&P 500, it’s common for their stocks to cycle in and out. That has accelerated as newer companies—especially in the tech space—have 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.

Early studies found that index inclusion led to a permanent increase in a companies’ market value and stock price—something reflected in Monday’s share performance.

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