Should I Buy Lululemon (LULU)? Finance YouTuber Analysis

Michael Burry is buying Lululemon, viewing it as a potential turnaround play. He believes the market is overly pessimistic, treating temporary management and execution issues as permanent decline. He notes the brand's resilience, strong cash flow, and a history of recovering from similar crises, suggesting a significant undervaluation at current prices.

“He's arguing that the market just might be treating a business with reasonably temporary execution problems as though it's in a terminal decline. And if he's right about that distinction, that's where the opportunity could come from.”

The analyst bought Lululemon, seeing an opportunity as its share price has collapsed due to tariffs, trading at $114 against his fair value of $173. He expects muted growth in the US but excellent international growth to drive the business. He also anticipates a potential catalyst if a future US administration reverses current tariff policies.

“I bought Lululemon stock for my own portfolio. The growth in the United States will likely remain muted, but the growth internationally is excellent for Lululemon.”

The analyst is avoiding Lululemon, despite its low P/E ratio (9.16), because its North American business is struggling, margins are compressing, and earnings are projected to decline. He views the fashion industry as uninvestable due to unpredictable trends and believes Lululemon is facing significant competition and an overstretched consumer base.

“So this one is not on my radar. It is not a stock I am interested in. And it seems like Michael Bur is investing in this one for a turnaround story.”

The YouTuber notes that Lululemon is growing significantly faster than Nike and is projecting continued growth, making it a stronger business in the current market. However, he ultimately avoids investing in consumer brands like Lululemon due to his inability to predict long-term consumer trends and identify sustainable moats in the industry.

“if I was interested in an heral company right now or a consumer brand I think that I would be much more interested in Lulu Lemon because that stock is basically the same price in terms of operating income but it is projecting significantly more growth it's not actually projecting decline to its business but in general I do not invest in the consumer Brand's industry because I just do not understand the Moes in this industry”

While not his favorite company, the YouTuber believes Lululemon could see momentum over the next year or two due to improving consumer sentiment, positioning it as a potential beneficiary.

“I wouldn't be surprised at all if Lulu sees momentum over the next year or two.”

The YouTuber notes Michael Burry's investment in Lululemon, a retail brand, after its stock dropped significantly. The thesis is that it's been overlooked by the market due to the focus on AI, making it an undervalued opportunity consistent with Burry's 'whale fall' strategy.

“It got completely left behind in the rush towards AI. No analysts upgraded in the past month. Nobody's talking about it, which is exactly the kind of situation that Bur looks for.”

The YouTuber discusses Lululemon as another 'falling knife' that Michael Burry has bought, noting its 70% decline and low P/E ratio of nine. He suggests that if North America sales stabilize and growth continues elsewhere, particularly in China, the stock could see a significant rebound. The company's profitability and lack of debt are positive factors, despite current negative sentiment.

“If you buy what is there stable if just they stabilize North America and keep on growing elsewhere. That is it. That will be 50% up in the stock.”

The analyst identifies Lulu Lemon as a potential long-term buy, noting that it has corrected significantly from its highs and is approaching a key Fibonacci retracement level. They believe that if the stock drops below $100, it will present an attractive entry point for a new long-term uptrend, potentially quadrupling in value to $400 by early 2025.

“Dort verläuft auch das 764er Fibonacci und das 100ter, in welchem wir gesagt haben, wir erwarten hier die langfristige Trendwende und wollen dann Einstiege hinterlegen bei Lulu Lemon, um diese ganze Korrektur, die jetzt hier eben gelaufen ist, mit dem Startpunkt aus dem Jahr 2017 heraus zu beenden, um dann wieder in eine neue Aufwärtsbewegung zu gehen.”

The YouTuber is waiting for Lululemon's next earnings report due to skepticism about fashion's moat. However, he believes the stock is undervalued, with high earnings and a low share price, and his valuation model suggests it is 'too cheap'. He would not be surprised if the bottom has already been seen.

“However, I would not be surprised if we have seen the bottom for Lule Lemon already last week and now we are about to see a big bounce. Lululemon earnings are high and the share price is low. Even my valuation model say Lululemon is just too cheap.”

The YouTuber plans to sell Abercrombie to buy Lululemon, citing strong fundamentals such as stable revenue (growing internationally), share buybacks, no long-term debt, good operating margins (20%), and positive free cash flow. He notes the forward P/E is around 13, and the stock has declined 66% from its peak while revenue has increased, making it an attractive contrarian buy.

“One trade I'm thinking to make is to sell a Bombroi to buy Lululemon. Lulu fundamentals are quite good. revenue is stable is declining a little bit in the US but it's growing very very rapidly internationally.”

The YouTuber suggests Lululemon, acknowledging its inherent risk as a fashion company and recent US revenue decline. However, he highlights rapid growth in Asia and product improvements as positive catalysts. Despite volatility, his conservative valuation, assuming slower growth, indicates a fair price of $340 per share, representing a potential 70% return.

“Let's assume that their growth slows from 20% of the past decade down to just 5% with 19% operating margins and a risk score of 38 out of 100, I get a fair price of $340 per share.”

The YouTuber is staying away from Lululemon, viewing it as a turnaround play in a difficult fashion industry. He notes that the company needs to make significant pivots to regain market share lost to more nimble micro-brands and become a trendsetter again, which requires trusting the management team's vision and execution.

“It's one I'm staying away from, but you got to pay attention to that management team and see exactly what they're doing.”

The YouTuber is selling Lululemon after a quick 10% gain post-earnings, viewing it as a short-term trade rather than a long-term investment. He believes further upside is limited due to the company's search for a new CEO and strategic direction, despite beating earnings expectations.

“There may be some follow-on buying as the momentum investors come back in, but I'm taking my quick 10% and I'm out until I see a strategic change in this company.”

The YouTuber suggests buying Lululemon on a dip after its earnings report, noting that shares are down 50% this year. He believes expectations are low (3.3% sales growth), and recent strong results from peers like Victoria's Secret, Ulta Beauty, and American Eagle suggest Lululemon could also beat. The stock is attractively priced at two times price to sales, less than half its January valuation.

“Expectations set an easy bar here at just 3.3% sales growth for the quarter and a deep cut to earnings. So, any good news should provide an upside.”

The analyst recommends Lululemon as a potential buy if the Supreme Court rules against Trump's tariffs. Apparel and footwear companies were among the hardest hit by tariffs, and a refund would provide a significant boost to their profitability, offering a strong potential return.

“Now, apparel and footwear companies like Lululemon Athletica, ticker LLU, Nike, NK, and VF Corporation, VFC, are going to be some of the best potential returns.”

The YouTuber views Lululemon's recent 25% drop as a buying opportunity, driven by a profit forecast cut and tariff concerns. He notes its shift in production away from China, its strong cash flow, and its current valuation being significantly below its historical average, suggesting no existential risk.

“Valuation here has dropped to 2.8 and eight times sales and under 17 on a price to earnings basis. Both of which are about 27% below the average valuation it's traded at over the last year. And the company is still strongly cash flow positive and with 1.3 billion balance sheet cash. So no real existential risk here and I like the shares at least back up to $300 each.”

The analyst advises avoiding Lululemon, categorizing it as one of the 'biggest laggards' in the consumer discretionary sector. This is based on its underperformance in Q1 earnings and the impact of tariffs on the sector.

“While the biggest lagards like Best Buy, Nike, and Lululemon should be avoided.”

The analyst suggests avoiding Lululemon at its current price, despite acknowledging it as a strong company with good long-term prospects. He notes that while the stock has been beaten down, he desires a larger discount from his calculated fair value of $186 per share to increase the margin of safety. Significant concerns remain regarding pressure on US sales due to tariffs and regulatory uncertainty, which could impact profit margins.

“If a stock could pull back a little bit more, I think this one could be a bit more interesting. But I do hesitate with the amount of pressure that's currently in place for this company in the United States.”

The YouTuber advises avoiding Lululemon, citing its 46% year-to-date stock decline and challenges like heightened competition, rapidly decelerating revenue, declining earnings estimates, and decreasing free cash flow. He notes the company is shifting from organic growth to paid advertising, indicating fundamental issues.

“The biggest problem that Lululemon's facing is it's dealing with heightened competition. The revenue is rapidly decelerating. The earnings estimates for their growth rate has gone down dramatically. The free cash flow is also declining.”

The analyst argues Lululemon is significantly undervalued after a 50% stock drop, despite strong fundamentals. He highlights consistent double-digit revenue growth, industry-leading gross profit margins, efficient SG&A management, and robust free cash flow. The company also has a pristine balance sheet with $2 billion in cash and zero debt, actively buying back shares, and trades at a historically low enterprise value to EBITDA multiple of 7.8x, suggesting substantial upside potential.

“Lululemon might be the most undervalued stock in the stock market right now.”

The analyst recommends buying Lululemon, citing its consistent revenue and earnings growth over the past decade, strong free cash flow generation, and zero debt. He believes the stock is currently well-priced at around $400, offering a market-beating 12% internal rate of return over the next 10 years, with a projected value of $916 to $1000 per share.

“I think this company's worth $1,000 or more. I'm going to show you why if you bought the stock today held it for a decade you can make some serious Jack.”

The analyst believes Lululemon is currently overpriced, trading at a 40x enterprise value to EBITDA multiple, which is too high given its historical average of 20x. While the company demonstrates strong revenue and EBITDA growth, low debt, and good free cash flow, the current valuation requires an aggressive double-digit growth rate for a decade to achieve a 13% IRR, which is not attractive enough for a high-conviction investment. He would consider buying if the stock dropped to the $250 range.

“I would love to see Lululemon management buy back some shares that's would be a great use of cash for that free cash flow or payouts more dividend right kick a dividend out you've got the free cash go ahead and do it but either way this return for me just isn't quite there I want to see a nice you know 15 20 idea ideally greater than 20 irr and to do that you have to be very selective so we're a pass now”

The analyst is not invested in Lulu Lemon and does not consider it a buy, citing significant macroeconomic and political headwinds such as higher import tariffs and weak consumer demand in the US. Despite a currently low P/E ratio around 16, the company faces stagnating earnings growth and high uncertainty, as reflected in wide analyst estimate ranges. The projected annual return is only 5% based on consensus estimates, which is deemed unattractive.

“Ich bin nicht in Lulu Lemon investiert. Ich habe momentan ja, ich bin nicht in Lulu Lemon investiert. Ich habe die Aktie letztes Jahr verkauft und ich erwäge an der Stelle jetzt auch keinen Nachkauf oder keinen Kauf von der Aktie.”

The YouTuber holds Lululemon, noting its valuation has become more attractive, even comparable to Nike. He anticipates continued strong growth in international markets (around 20%) despite recent weakness in its US home market due to product reception and inventory management issues. He hopes for a rebound.

“Lululemon auch sehr günstig jetzt sogar so günstig oder noch günstiger habe ich gesehen als Nike tatsächlich”

The analyst recently bought Lululemon Athletica for his company's growth-focused portfolio, citing its strong margins (double Nike's), consistent revenue and profit growth, and a recently raised outlook. He views it as a high-quality, high-growth company in the athletic apparel sector, despite its recent stock pullback which has made its valuation more attractive.

“Lulu Lemon Athletica die habe ich jetzt nachgekauft das he die ich vorher auch schon im Depot da war ich vor l Lemon athletica das ist ein sehr marchenstarker Sportartikelhersteller die machen also hochpreisiges dem auch doppelt so hohe Marchen ungefähr operative Marchen wie Nike und im Unterschied zu Nike sieht man hier äh keine Rückgänge bei Umsatz und Gewinn sondern man sieht hier das ist auf allzeit hoch auch eine sehr solide Bilanz sie haben auch ihr Ausblick im letzten Monat erst im Juni erhöht.”

The YouTuber is bullish on Lululemon, noting it's a fundamentally strong company. Technical analysis shows the stock has bounced off a support level, formed a lower high, and the RSI has returned from overbought territory, suggesting a high probability that the recent low was the bottom before further upward movement.

“Ich persönlich bin auf jeden Fall wie gesagt bei Lulu Lemon bullish hier ganz ganz wichtig das bedeutet nicht dass das hier jetzt das tief war und ab hier gehen wir für den Rest unseres Lebens nach oben es geht einfach nur um Wahrscheinlichkeiten es besteht jetzt derzeit eine hohe Wahrscheinlichkeit dass das hier das tief gewesen war und dass lulo Lemon ab hier jetzt dann weiter steigen wird.”

The YouTuber intends to build an initial position in Lululemon, noting its strong brand and historical growth, despite a recent 50% stock price drop due to a strategic product error. The company aims to expand its international business to 50% of total revenue, with strong growth in China (52%). The stock is currently trading at a historically low P/E of 21.8, presenting a buying opportunity for long-term investors.

“Das Unternehmen hat jedoch eine klare Strategie für die kommenden Jahre und ich sehe aktuell eine interessante Chance, eine Position in diesem qualitativ hochwertigen Unternehmen aufzubauen. Das Unternehmen heißt Lulu Lemon und hat sich auf die Herstellung und den Verkauf von Sportbekleidung spezialisiert.”

The analyst believes Lululemon is currently attractively priced compared to other market companies, but not a 'no-brainer buy' due to its 25x earnings multiple for low double-digit growth. He would consider buying if the stock falls further, as it faces increasing competition in its space.

“not a stock I'm going to be buying yet but definitely on my watch list because if it pulls back could be a really nice entry point”

Hoium suggests Lululemon as a potential starter position, praising its consistent net income growth and strong brand recognition. He notes the company's operating leverage, which allows net income to grow faster than revenue. Despite a higher P/E ratio of 34 compared to Topgolf Callaway, he believes its growth numbers and brand strength make it a well-positioned company.

“Given those growth numbers and the brand recognition that they have I still think this is a really a well-positioned company maybe worth a starter position.”