Lululemon stock price has crashed by 45% this year, continuing a sell-off that started in 2021.
The company’s growth trajectory has slowed amid intense competition.
Technical analysis suggests that the stock may rebound by 40% to $292.
Lululemon stock price has had another bad year as it crashed by 45%, even as the S&P 500 and Nasdaq 100 indices jumped to record highs. It has dropped from the all-time high of $516 in December 2023 to the current $207, bringing its market cap from $68 billion to $25 billion. So, will the stock rebound in 2026?
Why Lululemon stock price has plummeted
Copy link to section
Lululemon Athletica, one of the top beneficiaries of the Covid-19 pandemic, has become a fallen angel as its growth momentum has slowed.
Its annual revenue growth stood at 42% in 2021, 30% in 2022, 18.6% in 2023, and 10% last year. Its trailing twelve-month (TTM) revenue growth stood at 8.7%.
The most recent results showed that the revenue rose by 7% in the third quarter to $2.6 billion. This revenue was driven by its international segment, whose revenue rose by 33%. Its Americas revenue dropped by 2%.
The company’s comparable sales in the Americas segment dropped by 5%, while in the international market rose by 18%. This growth was driven by China, a country that has become one of its important markets.
Lululemon’s growth slowdown is partly because of the rising competition from other companies like Nike, Adidas, Gap, Vuori, and Sweaty Betty, which have taken market share from its company.
At the same time, Donald Trump’s tariffs have not helped as the company makes most of its products in Asia. In its most recent results, the company announced that its income from operations would receive a $210 million hit from tariffs.
Tariffs had an impact on its profitability in the last quarter. Its net income dropped to $306 million from the $351 million it made in the same period last year.
Growth concerns remain
Copy link to section
Wall Street analysts believe that the company’s growth will remain under pressure in the coming quarters because of tariffs, inflation, and competition.
The average estimate is that revenue in the fourth quarter will be $3.56 billion, down by 0.95% from what it made last year. If this is correct, this means that its annual revenue will be $11 billion, up by 4.19% YoY.
It will then make $11.5 billion in 2026. Chances are that Lululemon’s revenue and earnings will be higher than expected as it has done in the past.
On the positive side, chances are that the company’s slowdown has bottomed and that its growth will start improving in the coming years.
Additionally, the company has continued to buy back its shares in the past few months. It increased its share repurchase program by $1 billion. As a result, its outstanding shares have dropped from 124 million in 2021 to the current 112.78 million.
The company has also become a bargain, with its forward price-to-earnings ratio of 15.8, lower than the sector median of 17.6 and its five-year average of 34. Its forward EV/EBITDA of 9.2, down from the five-year average of 20.
LULU stock price technical analysis
Copy link to section
Lululemon stock price chart | Source: TradingView
The daily timeframe chart shows that the LULU stock price formed a double-bottom pattern at $160 and the neckline at $192. A double-bottom is one of the most popular bullish reversal patterns in technical analysis
The stock has now moved above the 50-day moving average, while the MACD and the Relative Strength Index (RSI) have continued rising.
Therefore, there is a likelihood that the stock will continue rising in 2026, with the potential target being the 50% Fibonacci Retracement level at $290, which is ~40% above the current level.
A drop below the double-bottom point at $160 will invalidate the bullish outlook.
