Lululemon’s Weak Results Send $LULU Tumbling as Michael Burry Prepares to Add More

• Lulu stock and Lulu revenue took a hit after the company reported weaker sales and a 4% YoY drop in revenue to $2.42B
• Michael Burry is taking the opposite approach and says he plans to keep holding Lululemon and buy more if the stock stays below $100
• Lulu outlook remains mixed with analysts currently rating the stock Hold and giving it an average 12-month target of $122

The markets have reversed their favour on Lulu stock as Lululemon reported weaker earnings and a difficult quarter report. The market responded to this change immediately, sending Lulu stock plunging by nearly 18% in after-hours trading. The Lulu shares briefly dropped below $100, following the results. The selloff was primarily triggered by investors as they reacted to weaker quarter reports and results. However, in an adverse scenario, Michael Burry, a leading American investor, has vowed to purchase Lululemon shares, irrespective of its current price plunge. Here’s why.

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Lululemon Revenue Update

Lululemon stock has declined 18% as recent market activity absorbed its latest weak earnings report. Lululemon’s revenue has fallen 4.4% YoY, to $2.42B in the second quarter. Other than Lululemon revenue, its comparable sales data is also facing pressure. The numbers have fallen by 9% while sales in America alone have declined 8%.

As one of the leading brands in America, Lululemon’s weak reports ended up putting pressure on the brand.

“BREAKING: Lululemon stock, $LULU, crashes over -20% after reporting a sharp decline in revenue and weaker than expected guidance. The stock is now trading at its lowest level since May 2018 and down -81% from its all-time high.”

The report later shared additional data, adding how the brand’s international sales were resilient as compared to its regional sales. The company further reported diluted earnings of $2.92 per share, down from $3.10 a year earlier.

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Despite the Odds, Michael Burry Wants to Buy More Lulu Stock

While the odds for Lululemon stock continue to face pressure, American investor Michael Burry has added how he wants to purchase more Lulu stock.

Burry shared how he believes Lululemon is a “trickster” in his portfolio. He later confessed how Lululemon is his largest portfolio position.

“Today, Lululemon (LULU) is the trickster in my portfolio. This time the trickster is my largest position, and it does seem determined to take me where mermaids fear to tread.”

His comments are reflecting a different stance as compared to broader market momentum. Burry later shared how he wants to increase his Lululemon position if the stock remains below $100. He later indicated that he wants to add Lulu stock further, viewing this plunge as an opportunity to buy more of the Lulu stock.

Lulu Stock Outlook

The Lulu stock outlook for the future remains mixed despite the pressure, as analysts weigh the company’s weaker performance against its potential recovery.

“Based on analyst ratings, Lululemon Athletica’s 12-month average price target is 122.00.”

Per TipRanks, Lulu stock has an average 12-month price target of $122. The analyst estimates currently range from $88 to $154. TipRanks

The analyst rating on TipRanks for Lulu stock is currently on “hold”, based on 19 Hold and 3 Sell ratings, with no Buy ratings.

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