I agree with you for the long haul but not in the short term. LULU wont feel the competitive pressures for at least another 8-12 months. Where I don't believe in the business model long term, you cant fight the tape which wants to head higher. A closer comparison to how the company stock may perform would be Chico's.
I take a different approach. I try to "bound" the value of that brand with others, comparing on multiple metrics to different classes of peers (UA, NKE). I conclude that based upon its current and proven brand space, it is WILDLY overvalued. Now, if it succeeds in other categories, it may catch up to its valuation, assuming competitive offerings don't crowd out opportunity and hurt the economics by increasing customer acquisition costs (and retention once guests have gotten their yoga training...).
Look, it's a story that is way ahead of itself. It's why insiders cannot sell fast enough. NFLX went 4X too high before cratering, but crater it did.
LULU is goong to feel real competitive product lines this year, in a recessionary environment with a weak CAD. I like my odss...
LULU may have been expensive at $20 but was certainly a short candidate at $60+ and I laughed all the way to the bank. It's an expensive stock whether you agree with it or not. At 47.54 (after hours), can it trade higher? Sure. Is it worth it? No, by any metrics. I am not Graham or Buffet but I would rather be on the right side of the trade. Right side of the trade could sometimes take a long time but it's inevitable just like losing all your money is inevitable when you are on the wrong side of the trade long enough.
I would also point out that short interest and short ratio on Tif is far less than you see on Lululemon. That creates a potential short squeeze situation.
Anyone notice that year over year retail sales seem to be better than expected. When Lulu gave guidance, they were seeing an environment that was worse than it turned out to be for retail.
Something to think about.
Again, relying on a short squeeze is NOT a good strategy. You are simply relying upon long only funds to squeeze for the last 5% before capitulation rather than taking gains on an asset that is valued at 2X what it should be.
Long only funds playing the short squeeze game in this environment would be negligent IMHO. I don't think they would take that extraordinarily cavalier risk.