Michael Burry Boosts Lululemon Stake: 'Relative Value In LULU Outweighs Microsoft'

• Burry said that tariffs were the main reason Lululemon's Q1 margins weakened.
• He said LULU’s tangible book value per share has doubled from about $20 to $40 over the past three years. 
• After the post-earnings selloff, Burry increased his stake in Lululemon, saying it offers better value than Microsoft.  

Lululemon Athletica (LULU) has found backing from legendary investor and former hedge fund manager Michael Burry, who has boosted his holdings of the athleisure brand even as the stock continued its decline after disappointing fiscal first-quarter (Q1) earnings and outlook. 

Lululemon Athletica stock plunged nearly 9% on Friday after the company warned that business has slowed heading into Q2, with waning customer interest and some products not performing as well as expected. 

The company expects Q2 revenue of $2.45 billion to $2.48 billion, about 2% to 3% lower than last year. Lululemon also cut its full-year 2026 forecast, now expecting revenue of $11.0 billion to $11.15 billion, below its previous outlook of $11.35 billion to $11.5 billion.

Burry Doubles Down On LULU 

In his Substack post on Friday, the “Big Short” investor described the latest earnings call as lacking meaningful updates, and added that the market may be overlooking the retailer’s underlying financial strengths.

Lululemon's profits came under pressure during Q1 as tariffs and other trade-related costs reduced its gross margin. Burry said these costs were the main reason for the decline and noted that, without the tariff impact, the company's profitability would have looked much stronger compared with earlier periods.

“Of the 32 Wall Street analysts covering LULU, only 2 have buy ratings. This is the least cheery consensus I have seen for a company in this financial condition without significant legal or regulatory liabilities pending,” wrote Burry. 

Despite his concerns about management, Burry praised Lululemon’s long-term execution. He credited the finance team for maintaining operational discipline during a challenging retail environment.

“These days a steadily growing tangible book value per share is rare and a strong sign. In LULU’s case, its tangible book value per share has doubled from $20/share to ~$40/share over the last 3+ years. High returns on equity match high returns on capital,” said Burry. 

Burry said he increased his position in the stock after shares fell into the low-to-mid $110 range. 

“The relative value in LULU and PYPL by my estimation outweighs that of Microsoft at this time,” he said. 

In a post published Sunday on X, the Scion Asset Management founder said the last stock he owned that faced a level of investor negativity comparable to LULU was GameStop (GME) in 2019. 

GameStop later became the darling of “meme stock” mania and has gained over 614% since 2019. Burry sold his stake in the video game retailer last month after the company made a massive $56 billion offer to acquire eBay (EBAY). 

LULU Retail Traders View 

On Stocktwits, retail sentiment around the stock remained in ‘extremely bullish’ territory. 

A user said, “this is not a short term hold 

I’m buying little by little and waiting out for the next few years.”

Another user said, “This m*********** trying to convince that earnings was very bad, but they still making alot off money , if you take comparison make money per share no f****** companies you can find the same. It is like [the] athlete with [the] best world score and someone complaining that he did not beat his record every year.” 

LULU stock has declined by 45% year-to-date. 

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