Shares of Lululemon (LULU) plunged 18% overnight following a disappointing fiscal Q2 earnings report, hitting the top holding in Michael Burry’s portfolio.
Burry said LULU is in crisis, a state in which it has found itself repeatedly over the years.
Burry anticipated a weak quarter for Lululemon before the earnings release and had warned about that possibility several times through his investment commentary.
“I like volume signals, and they have completely turned over their shareholder base, and newer holders from these levels will be less likely to sell,” Burry said in a chat discussing about the athleisure brand ahead of the earnings.
Plans to Buy the Dip Under $100
“I continue to hold lululemon, and I will buy more of it if it trades under $100 tomorrow morning, as it is now after hours. Down about 20% from my last purchase, my rule is to either buy more or sell it.” LULU makes up about 17.4% of his portfolio.