What Happened:
Shares of footwear and apparel conglomerate Deckers (NYSE:DECK) jumped 6.3% in the pre-market session after the S&P Dow Jones Indices announced that the company would join the index before the start of trading on Monday, March 18, 2024. The S&P 500 is a widely followed index that tracks the performance of the 500 largest companies in the United States. Being included in the index means that Deckers Outdoor will likely be held by many mutual funds and ETFs, which could potentially drive up demand for the stock. We note that while buying of the stock could increase, this development does not change the fundamentals of the company. Revenue growth, expense efficiency, and capital intensity of the business, for instance, are not impacted by index inclusion or exclusion, so this is more of a technical tailwind for the stock. After the initial pop the shares cooled down to $927.74, up 2.8% from previous close.
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What is the market telling us:
Deckers's shares are not very volatile than the market average and over the last year have had only 5 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
Deckers is up 37.6% since the beginning of the year. Investors who bought $1,000 worth of Deckers's shares 5 years ago would now be looking at an investment worth $6,397.
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