$Lululemon(LULU.US)

Last night, lululemon's stock price plummeted, and most people's mentality collapsed. The most common comments online are that lululemon's products are outdated, and young people are all wearing Alo. This is similar to the saying in China that young people no longer drink Moutai.

If a company's stock price rises, all you can see are positive news, like the current AI companies. But if a company's stock price falls, you can basically see negative news, like the current consumer companies.

Regarding lululemon, I want to share a few thoughts.

1. The company's announced performance is not that bad, and revenue still maintained positive growth without significantly increasing marketing expenses. This is rare and proves the brand's strength remains strong. Conversely, if lulu increases marketing investment, achieving high-speed revenue growth is not difficult. But why didn't they do it? I speculate it is related to the current macro environment, where aggressive expansion may not be a good strategy in such a high-interest environment.

2. Currently, global consumer companies generally have poor performance, not just lulu. If other peers like Nike, Adidas, Anta, etc., are thriving, and only lulu is not doing well, that would indicate a problem with the company's fundamentals. In a bad macro environment, choosing excellent companies to buy at low prices offers the opportunity to make big money.

3. Alo definitely has an impact on lulu, but every industry can accommodate two or even more players. This is just a normal market competition phenomenon, like Pepsi and Coca-Cola, McDonald's and KFC, Nike and Adidas. The emergence of a second player does not hinder the growth of the first. Moreover, in the consumer goods sector, once the leader occupies the top position in consumers' minds, as long as the leader does not make serious mistakes, it is difficult for the second player to surpass them.

Currently, the negative reviews about lulu and the praise for Alo are merely because lulu's stock price keeps falling. When lulu's stock price shows a big upward trend in the future, people's opinions will change, just like UnitedHealth not long ago.

I believe lululemon's current price is cheap enough, the brand strength is still there, and the company repurchases about 1.5 billion dollars in cash each quarter, with a shareholder return rate of 7.5% compared to the current stock price. Whether it can return to the peak in the future is uncertain, but at this price, if you already hold it, there is no reason to sell.