Lululemon stock leaps as shares are tapped to replace Activision in the S&P 500

Lululemon, which is now worth around $50 billion, will replace Activision Blizzard in the S&P 500 following the latter's takeover by Microsoft.

Oct 16, 2023 - 19:30

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Lululemon stock leaps as shares are tapped to replace Activision in the S&P 500

Updated at 9:52 am EDT

Lululemon Athletic (LULU) - Get Free Report shares powered higher in early Monday trading following confirmation that the athletic apparel group will replace Activision Blizzard (ATVI) - Get Free Report in the S&P 500.

Lululemon, with a market value of around $51.6 billion, will enter the benchmark on Wednesday, S&P Dow Jones Indices said in a weekend statement, replacing Activision following its $69 billion takeover by Microsoft (MSFT) - Get Free Report, which was completed last week.

Stocks that are added to the S&P 500, as well as other benchmarks, often see a solid near-term boost as investors add their shares to funds that track the major indices.

Shares in the group have risen nearly 200% over the past five years, adding billions to its market value, as its continues to win over shoppers in the key demographic of upscale athletic apparel and fitness in the U.S. while expanding its operations to overseas markets.

Earlier this summer, Lululemon lifted its forecast full-year revenues to between $9.51 billion and $9.57 billion following better-than-expected second quarter earnings that contrasted muted outlooks from sports apparel rivals such as Nike (NKE) - Get Free Report and Adidas.

The group also unveiled plans for a five year content and apparel partnership with Peloton Interactive PTON late last month that will see it become the primary athletic apparel partner on the connected fitness group's website and in its retail stores.

Lululemon also said it would stop selling its 'Mirror' fitness hardware, which it purchased for $500 million in 2020, by the end of the year, but would continue servicing existing customers with content from Peloton. .

Lululemon shares were marked 8.25% higher in early Monday trading to change hands at $408.84 each, a move that would nudge the stock into positive territory over the past six months.