Why Is Michael Burry Betting on Lululemon?
Michael Burry's case for Lululemon is a valuation and balance-sheet case, not a growth case: he has said on his Substack that the stock is "screaming cheap," pointing to about $1.4 billion of cash and no debt, a tangible book value per share that doubled from about $20 to about $40 in three years, and heavy buybacks, and that it could return 15% to 20% a year over 15 to 20 years if the brand regains its footing.
- The business is moving the other way: second-quarter comparable sales fell 9%, the 2026 EPS guide was cut twice, and revenue is guided down 10% to 11% next quarter.
- At $99.01 the shares trade at about 8 times trailing earnings, 54% below their high.
This is educational analysis, not investment advice.
What has Michael Burry actually said, and where?
| What | Detail | Source |
|---|---|---|
| His view | The stock is "screaming cheap" | A Substack reply reported on August 24, 2026 |
| Where he would add | He said he would buy more below $100, and called it a "fat pitch" there (paraphrased by the Motley Fool) | Substack, after the September earnings report |
| Earlier buying | He reportedly added after the shares fell into the low-to-mid $110s in early June | TIKR, July 2026 |
| Position size | Described as his largest position by the Motley Fool; one reader tally put it near 17% of his holdings | Substack-based reports, September 2026 |
| How he describes it | "The trickster in my portfolio," after an 18% one-day fall | Headlines from Benzinga and others; his posts were not read directly |
These come from his Substack, not from a filing. His only filing this site can show is the last 13F, for September 30, 2025 (filed November 3, 2025), which listed 100,000 Lululemon shares worth $17.8 million, about 26% of his $68.1 million of reported US holdings and his second-largest position after Molina Healthcare. Anything newer, including how many shares or options he owns now, is his own statement and unverified. See Scion Asset Management's page and how to read a 13F for what a 13F does and does not show.
What are Burry's reasons, and do the numbers support them?
| His argument | The numbers | The catch |
|---|---|---|
| The balance sheet is strong | About $1.4 billion of cash and no debt at the end of fiscal Q2 (August 2, 2026) | True, and this site shows debt to equity of 0 |
| Tangible book value keeps rising | Tangible book value per share was $40.52, up from $34.26 a year earlier (TIKR), about double its level three years ago | Book value is only a floor if the assets keep their value, and earnings are falling |
| Buybacks shrink the share count | 2.7 million shares repurchased for $330 million in fiscal Q2, about $122 each | That price is well above today's $99, so earlier buybacks look expensive |
| It is cheap on earnings | 8.2 times trailing and 11.6 times forward earnings, and a free-cash-flow yield near 12% | Forward is higher than trailing, which means analysts expect earnings to fall |
| The brand can recover | He says returns of 15% to 20% a year are possible over 15 to 20 years if the brand regains its footing | That is a long-run condition, and the recent trend runs the other way |
His view also treats Lululemon as a relative-value bet: he has said it looks more compelling than some large technology stocks, and compared the setup with GameStop in 2019, when it was also unloved and cash-rich, according to reports of his Substack chat.
What does the long-term return claim require?
The Motley Fool worked through the arithmetic. From about $97, a 15% annual return for 15 years would take the stock to about $790, and a 20% return for 20 years to more than $3,700, about 40 times today's price. At roughly 10 times earnings the shares can only compound like that if earnings grow, buybacks shrink the share count and the multiple rises: a P/E that doubled from 10 to 20 over 15 years would add almost 5% a year on its own. The Fool's point, which is its opinion, is that Burry's thesis needs earnings to stop falling, not growth.
Lululemon's fiscal 2026 EPS guidance midpoint after each update, against fiscal 2025 EPS of $13.26, from reports in TIKR, Yahoo Finance and the Motley Fool.
How is the business doing?
| Measure | Latest | Note |
|---|---|---|
| Revenue, fiscal Q2 2026 | Down 4% | Q1 revenue had risen 4% to about $2.5 billion |
| Comparable sales | Down 9% | From +3% in Q4 and +1% in Q1 |
| Americas comparable sales | Down 12% | Q1 Americas comps were down 5% |
| Q2 EPS | $2.92 | Included about $0.86 from tariff refunds of $134.5 million; without it EPS would have fallen about a third |
| Fiscal 2026 EPS guide | $9.48 to $9.73 | Cut for the second time this year, from $12.10 to $12.30 in March; about 28% below the prior year at the midpoint |
| Fiscal Q3 outlook | Revenue down 10% to 11% | Management expectation |
| Stock reaction | Down about 17% in a day | Closed at $96.88 on September 10, a 52-week low and the first close under $100 in more than eight years |
| Leadership | A new CEO | Nike veteran Heidi O'Neill has taken over, per the Motley Fool; an interim co-CEO and CFO ran the company earlier in the year |
China is the bright spot: Mainland China revenue grew about 30% in the first quarter, partly timing, with management putting the underlying trend near 20%. The Americas, the largest market, is where sales are falling.
Why do most analysts disagree?
| Firm | Rating and target | Date |
|---|---|---|
| Truist | Sell, target $94, saying headwinds may prove more structural | July 16, 2026 |
| Morgan Stanley | Underweight, target $93 | July 6, 2026 |
| Wells Fargo | Target cut to $105 from $110 | July 21, 2026 |
| Koyfin consensus (August) | 29 of 34 analysts rate it Hold, one Buy, with an average target near $128 | August 24, 2026 |
The Street's mean target fell from about $291 in August 2025 to about $128 in July 2026, and forward estimates assume revenue near flat and EPS falling about 8% a year. The bears' case is that traffic is down across all demographics, competition from newer athleisure brands is rising and tariffs weigh on margins. Burry's counter is price: a company with no debt and a lot of cash that is cheap enough does not need everything to go right. Whichever side is right, the next checkpoint is the fiscal third-quarter report in December, whose date was not found.
How does LULU look on this site's checks?
From the weekly data of October 23 to 24, 2026, on the Lululemon stock page:
| Measure | LULU | What it tells you |
|---|---|---|
| Price / market value | $99.01 / $11.7 billion | 54% below its 52-week high of $225.98 |
| Trailing / forward P/E | 8.2 / 11.6 | Forward above trailing means expected earnings are lower |
| Price to sales / price to book | 1.05 / 2.44 | Both within this site's limits |
| Revenue growth / net margin | +1.7% / 12.8% | Trailing twelve months, before the guided declines |
| Free-cash-flow yield | 11.6% | Free cash flow per share of $11.47 |
| Debt to equity | 0.00 | No debt |
| 1-year change / RSI | -44.5% / 49.7 | Down by almost half over a year |
| Value filters / Buffett-style / Lynch-style | 4 of 8 / 7 of 8 / 3 of 5 | Earnings quality rated Strong |
| Margin of safety (DCF) | +49.4% | A neutral model that fades growth from 8% to 2.5%; it does not know earnings are being cut |
A cheap multiple on falling earnings is the setup how to check if a stock is a value trap is about, and the margin of safety above rests on today's cash flow, which is why what is margin of safety in investing warns against trusting it blindly. Copying a famous investor is also not a strategy: you cannot see his cost, his options or his exit plan.
Sources
- TIKR: Lululemon has lost 45% in 2026; Michael Burry bought the dip (July 2026): his comments, buybacks, tangible book value, analyst actions
- Motley Fool: Michael Burry likes Lululemon stock, but the math only works if sales stop shrinking (September 11, 2026): Q2 results, guidance, return arithmetic
- Stocktwits via Yahoo Finance: Michael Burry says LULU stock is screaming cheap (August 24, 2026): his Substack comments
- Scion Asset Management on this site: his last 13F (September 30, 2025)
- Lululemon on this site: price and ratios, October 23 to 24, 2026
The Benzinga and Moneywise articles could not be read, so the "trickster" quote and the position-size claim rest on headlines and a reader's tally. The company's own results release was not read: the second-quarter figures come from the Motley Fool, and the 18% drop is reported as 17% there. Burry's statements are his own and can change at any time. This is educational content, not investment advice.
Burry and Lululemon FAQ
Why is Michael Burry betting on Lululemon?
He says it is screaming cheap: about $1.4 billion of cash, no debt, a tangible book value per share near $40, and a chance of 15% to 20% yearly returns over many years if the brand recovers.
How much Lululemon does Burry own?
His last 13F, for September 30, 2025, showed 100,000 shares worth $17.8 million. Later reports describe it as his largest position, but that comes from his Substack and is unverified.
At what price would Burry buy more Lululemon?
He has said he would add below $100, and the stock closed at $96.88 on September 10, 2026 and about $99 on October 23.
Why are analysts bearish on Lululemon?
Comparable sales fell 9% in the second quarter, the 2026 EPS guide was cut twice, revenue is guided down 10% to 11% next quarter, and 29 of 34 analysts rate it Hold.
Is Lululemon cheap?
It trades at about 8 times trailing earnings, a free-cash-flow yield near 12% and no debt, but forward earnings are expected to be lower, so cheap on trailing numbers may not stay cheap.