Lululemon (LULU) Stock Trades Up, Here Is Why

What Happened?

Shares of athletic apparel retailer Lululemon (NASDAQ:LULU) jumped 3.1% in the morning session after the firm of renowned investor Michael Burry, known for his successful bet against the housing market before the 2008 financial crisis, disclosed a new stake in the company. According to a regulatory filing, Burry's firm purchased 50,000 shares valued at nearly $11.9 million, making Lululemon 2.05% of its portfolio. This move by a high-profile value investor is drawing attention to the stock, which has fallen significantly from its previous highs. The interest may also be fueled by the company's own confidence, reflected in an aggressive $1.77 billion share buyback program over the past 12 months. This buyback, coupled with the stock trading at a five-year low price-to-earnings ratio, suggests that both management and prominent investors may see the athletic apparel maker as undervalued.

After the initial pop the shares cooled down to $198.73, up 1.8% from previous close.

Is now the time to buy Lululemon? Access our full analysis report here, it’s free.

What Is The Market Telling Us

Lululemon’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was about 24 hours ago when the stock dropped 3% on the news that a hotter-than-expected wholesale inflation report fueled concerns about slowing consumer spending. The market was rattled by a Labor Department report showing the Producer Price Index (PPI), a measure of wholesale inflation, jumped 0.9% in July, significantly exceeding economists' expectations of a 0.2% rise. This was the largest monthly increase since March 2022, reigniting worries that businesses will be forced to pass higher costs on to consumers, who are already showing signs of price sensitivity. This inflation data has fanned concerns that U.S. tariffs on imported goods could start to translate into higher prices for shoppers. The inflation report landed amid growing evidence of consumer caution, with recent reports highlighting that shoppers are cutting back on non-essential spending, seeking out sales, and trading down to cheaper brands.

Lululemon is down 46.6% since the beginning of the year, and at $198.73 per share, it is trading 52.8% below its 52-week high of $421.16 from January 2025. Investors who bought $1,000 worth of Lululemon’s shares 5 years ago would now be looking at an investment worth $560.14.

Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.