Michael Burry Sees Acquisition Potential in Lululemon
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
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Source: seekingalpha
- Investor Interest: Renowned investor Michael Burry labeled Lululemon (LULU) as a “tempting” acquisition candidate, indicating a growing interest in the company for private equity buyouts, which may attract more investor attention.
- Increased Holdings: Burry initiated a 50,000 share position in Lululemon through Scion Management in Q2 2025 and doubled it to 100,000 shares in Q3, raising its portfolio weight to approximately 2%, reflecting his confidence in the company.
- Strong Financials: At the end of Q3, Lululemon held $1 billion in cash and cash equivalents, with the capacity to borrow an additional $593 million under its revolving credit facility, indicating robust financial health and the ability to navigate market fluctuations.
- Stock Price Volatility: Despite a 42% decline in Lululemon's stock price over recent months, shares rose 3% on Monday, suggesting a potential reassessment of the company's future prospects, which may present buying opportunities for investors.
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Analyst Views on LULU
Wall Street analysts forecast LULU stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for LULU is 207.12 USD with a low forecast of 146.00 USD and a high forecast of 303.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
22 Analyst Rating
1 Buy
21 Hold
0 Sell
Hold
Current: 174.500
Low
146.00
Averages
207.12
High
303.00
Current: 174.500
Low
146.00
Averages
207.12
High
303.00
About LULU
lululemon athletica inc. is a technical athletic apparel, footwear, and accessories company. The Company organizes its operations into four regional markets: the Americas, China Mainland, Asia Pacific (APAC), and Europe and the Middle East (EMEA). It conducts its business through a number of different channels in each market, including the Company-operated stores, e-commerce, temporary locations, wholesale, outlets, a re-commerce program, and license and supply arrangements. The Company offers a comprehensive line of technical athletic apparel, footwear, and accessories marketed under the lululemon brand. Its apparel assortment includes items such as shorts, tops, and jackets designed for a healthy lifestyle, including athletic activities such as yoga, running, training, and most other activities. It also offers apparel designed for being on the move and fitness-inspired accessories. It operates stores in the United States, Canada, China Mainland, Australia, South Korea and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Michael Burry Sees Acquisition Potential in Lululemon
- Investor Interest: Renowned investor Michael Burry labeled Lululemon (LULU) as a “tempting” acquisition candidate, indicating a growing interest in the company for private equity buyouts, which may attract more investor attention.
- Increased Holdings: Burry initiated a 50,000 share position in Lululemon through Scion Management in Q2 2025 and doubled it to 100,000 shares in Q3, raising its portfolio weight to approximately 2%, reflecting his confidence in the company.
- Strong Financials: At the end of Q3, Lululemon held $1 billion in cash and cash equivalents, with the capacity to borrow an additional $593 million under its revolving credit facility, indicating robust financial health and the ability to navigate market fluctuations.
- Stock Price Volatility: Despite a 42% decline in Lululemon's stock price over recent months, shares rose 3% on Monday, suggesting a potential reassessment of the company's future prospects, which may present buying opportunities for investors.
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Nike and Lululemon Struggle Amid Consumer Spending Challenges
- Stock Performance Comparison: Nike's stock has dropped about 63% from its previous highs, with a 13% decline over the past 12 months, while Lululemon has seen a 50% drop, indicating Nike's relative resilience amid market volatility.
- Revenue Pressure Analysis: Both companies face revenue pressures from tariffs and soft demand, with Nike reporting a 16% year-over-year sales decline in Greater China, while Lululemon achieved a 7% revenue increase in the last quarter, showcasing its stronger recovery potential.
- Inventory Management Advantage: Lululemon successfully sold excess inventory during the holiday season, positioning itself with leaner inventory ahead of the spring product refresh, which could help tighten margins by avoiding promotional sales pressure.
- Valuation Comparison: Lululemon's forward price-to-earnings ratio is around 15, significantly lower than Nike's 42, indicating that Lululemon shares are perceived as better value in the current market environment.
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