How Does A Yoga-Pant Company Attract So Many Investors?

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If you’re a wealthy yogi or runner, than maybe you’ve heard of the cult-like Lululemon Athletica (NASDAQ:LULU) workout clothes. But then again, if you’re a short-seller, maybe you’ve also heard of the workout apparel company.

But first, how did this company grab so many investors to reach a $10 billion market cap? According to the Financial Times, Lululemon comes with a lot of interesting appeal:

  • The clothes are both flattering and high quality.
  • They come with an appropriately expensive price tag.
  • The branding has more appeal to women than Nike (NYSE:NKE).
  • One product line is made with seaweed fabric (see the VitaSea line).
  • Lululemon does a lot of yoga-based promotions such as free classes.

Since going public in 2007, Lululemon has a billion dollar in sales with a market cap of $10 billion or 10 times sales. How does this compare to industry behemoth, Nike? It has a $46 billion market cap and price to sales ratio over 2.

It’s bad enough to come between a yogi and her workout but short-selling this stock can also produce a similar frustration. This stock doesn’t bode well for short sellers and now there’s about 12 percent of it on loan since mid-January, according to Dataexplorers.

In the past few years, it’s been a challenge and obsession to successfully short sell this stock. Its stock dips have been few and far between. Maybe the company is trying to tell short sellers something with these patterns, like focus on your mental health and not your bank account?

Here’s how Lulu shares are trading now:

Lululemon Athletica Inc. (NASDAQ:LULU): LULU shares recently traded at $64.92, down $0.02, or 0.03%. They have traded in a 52-week range of $36.35 to $65.27. Volume today was 925,962 shares versus a 3-month average volume of 3,547,010 shares. The company’s trailing P/E is 57.30, while trailing earnings are $1.13 per share.

To contact the reporter on this story: at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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