Lululemon Stock Sinks on Guidance Update

Over the last three months, LULU has shed roughly 13%

Digital Content Manager
Jan 10, 2022 at 11:03 AM
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The shares of Lululemon Athletica Inc (NASDAQ:LULU) are down 6% at $333.94 this morning, after the apparel retailer said its fourth-quarter earnings and revenue will likely come in on the low end of its projected ranges, due to the Covid-19 omicron variant's impact on holiday results. The company noted capacity constraints, as well as limited staff availability and reduced store operating hours, as infections surge.

The stock has pivoted lower since its Nov. 16, all-time high of $485.82, despite a short-lived December rally off the 320-day moving average. The equity is currently trading at its lowest level since June, while eyeing its seventh loss in eight sessions, and biggest single-day drop since March. In the last three months, LULU has shed roughly 13%.

Analysts were optimistic towards Lululemon Athletica stock coming into today, with 16 of 22 in question carrying a "buy" or better, while the remaining six said "hold." Plus, the 12-month consensus target price of $464.69 is a 38.5% premium to the equity's current perch. This could lead to downgrades and/or price-target cuts, should LULU's negative price action continue. 

Options traders have been pessimistic towards the equity, however. This is per LULU's Schaeffer's put/call open interest ratio (SOIR) of 1.25, which stands higher than 80% of readings from the last 12 months. This means short-term options traders have rarely been more put-biased.

Drilling down to today's options activity, 9,204 puts have already crossed the tape, which is three times the intraday average. Most popular is the weekly 1/14 325-strike put, followed by the 320-strike put in the same series, with positions being opened at both.

 

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