Regardless of the supply constraint for lulu pants, sales demand is diverging from supply. LULU may have shipped everything via air freight for supply recovery, unfortunately, sales are not there to support the inventory.
Channel checks clearly show that traffic has slowed.
For that exact reason the funds are buying lulu hand over fist. You gotta think before posting nonsense that depsite all the negativity the past few weeks, lulu held up very strong. Why do you think it is $73 not $53 despite weak guidance?
Why is it 73 and not 53? How is that a valid arguement? The market regularly misprices, overvalued, and undervalued many stocks? That is the nature of the stock market.
The "market"(select "investors" and hedge funds) are pushing this POS up on the guise that the 30% growth rate in revenues and earnings is sustainable. How? There are so many companies that have been AROUND longer that are not being valued the way Lululemon is despite these other companies having a more stable target market/product, brand name as well as same earnings. These companies are being valued for a 3rd of what lululemon is being valued.
The key is not too get frustrated by these antics and clear ridiculous misricing(some would manipulaton as there no fundamental reasons for the valuation). The key is to make sure you are taking risks where you have the ability to remain solvent and add to one's positon(short) as the company gets more and more ridiculously overvalued,
Just take a look at insider transactions. The CEO McCormick has sold every share she has gotten the last two years excluding the 60,000 she recieved this past month. It is a joke.
Despite Lululemons earnings, its return of cash to investors is 180M/year. Deckers is producing more cash at less than 1/5th lululemons valuation. Who in their right mind would choose to take more risk with this overvalued garbage when they can take virtually the same risk with their money with much better reward in Deckers. The market is not stupid, the charade can only go for so long. Those who go short keep in mind these types of shenanigans and make sure of the ability to stay solvent. So basically sheer manipulation under the guise of SHORT SQUEEZING. Who are they short squeezing? Hedge funds and smart investors who know not to play over their heads?
C'mon. This stock could drop 20% in a day and nobody would blink as it woiuld still be so overvalued. 39 p/e for a company making yoga pants. We've seen it all.
This stock is trading STRICTLY on TA. LULU can't penetrate below $60. As soon as LULU gained above $66, short covering kicked in. As soon as LULU broke above $71, stock rallied. Yet, as soon as LULU hit $76, it topped out. It's very predictable.
All of a sudden, the quality issue is no longer a concern. This is why I always thought that the sheer issue is just a ruse to cover up for the slack in sales in Q1/Q2. I have not been squeezed out of my short position. I realized that the market can be irrational lot longer than I can remain solvent. I think I will prevail with my research....