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Why Lulu and Nike win this crazy stock market plummet?

4/5/2025 07:30am

Aime

The deep research logic is organized as follows: 

Okay, let's tackle this question: "Why Lulu and Nike win this crazy stock market plummet?" The user is asking why Lululemon (LULU) and Nike (NKE) are performing well despite a significant market downturn. 

First, I need to look at the references provided. Let me go through each reference to find relevant data points about both companies.

Starting with Nike (NKE), references 1, 2, 3, 4, 5, 12, 13, 14, 15, 22, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52. 

From reference 1, Nike's Q3 earnings are expected to show a sales decline, but they have a history of beating EPS estimates. Reference 2 mentions that Nike's stock rebounded after potential tariff relief talks with Vietnam. Reference 3 states that Nike's shares surged 5.9% due to positive tariff developments, with analyst consensus showing a 39.70% upside. Reference 4 also notes that Nike's stock rose after Trump hinted at tariff cuts. Reference 5 discusses supply chain challenges but also mentions that Nike's production is heavily reliant on Vietnam, which might be mitigated by tariff relief. Reference 12 points out that Nike's stock dropped after Q3 results, but EPS and revenue beat estimates. Reference 22 highlights that Nike's stock spiked 5% after Vietnam's leader signaled willingness to negotiate tariffs. 

For Lululemon (LULU), references 6, 7, 8, 9, 10, 17, 18, 19, 20, 21, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52. 

Reference 6 mentions that Lululemon's stock fell due to disappointing guidance, but reference 21 states that despite a 14.3% drop, Lululemon's Q4 results beat expectations. Reference 7 and 8 discuss Lululemon's FY26 and FY2025 guidance, which were slightly below expectations but still positive. Reference 23 notes that Lululemon's Southeast Asia supply chain was hit hard by tariffs, but reference 24 discusses the "China plus one" strategy unraveling, which might affect Lululemon. Reference 25 and 26 mention that Lululemon's Q1 guidance was below expectations but still positive. 

Now, considering the user's profile: they're interested in WallStreetBets, Lidar, Apple Concept, 5G, and AI. They hold MVIS and INTC. They're concerned about margin calls and tariffs' impact on Nvidia. Their approach is technical analysis and news-driven, with a medium to long-term horizon.

The key points to highlight are:

1. **Tariff Mitigation**: Both companies have significant production in Vietnam. The potential tariff relief (references 2, 3, 4, 22) led to stock rebounds. This is crucial as tariffs were a major market concern.

2. **Strong Fundamentals**: Despite market downturns, both companies beat earnings estimates (references 1, 6, 21). Nike's EPS beat by 29.82% on average (reference 1), and Lululemon's Q4 EPS beat by $0.29 (reference 26).

3. **Strategic Partnerships**: Nike's collaboration with Kim Kardashian's Skims (reference 1) helped boost sales in women's activewear, competing with Lululemon. Lululemon's expansion into new categories (golf, tennis) (reference 21) shows strategic growth.

4. **Supply Chain Resilience**: Both companies are working to mitigate supply chain risks. Nike's focus on Vietnam and potential tariff relief (reference 5) helped. Lululemon's diversification efforts (reference 24) might be a factor.

5. **Market Sentiment**: The market's reaction to tariff news (references 2, 3, 4, 22) drove short-term gains. Investors might be positioning for potential tariff reductions.

6. **Technical Analysis**: The user is interested in technicals. For example, Nike's stock surged 5.9% (reference 3), and Lululemon's stock rose 3.9% (reference 4). These moves could be part of a technical rebound.

7. **Analyst Upgrades**: References 3, 4, 25 mention analyst upgrades and positive price targets, which can drive investor confidence.

8. **Competitive Positioning**: Both companies are leaders in their niches (athletic apparel). Nike's brand strength and Lululemon's premium positioning (reference 10) provide resilience.

Potential risks to mention: supply chain vulnerabilities (reference 5 for Nike, 23 for Lululemon), tariff uncertainties, and market volatility. However, the question focuses on why they're winning, so the answer should emphasize the positive factors.

Now, structuring the answer:

- Start with a conclusion that both companies are benefiting from tariff relief news, strong fundamentals, and strategic moves.
- Break down into sections: Tariff Developments, Earnings Performance, Strategic Initiatives, Market Sentiment, and Risks.
- Use references to back each point, ensuring citations are correctly numbered.
- Include visualizations for queries mentioned in references (e.g., "Nike stock surged 5.9% amid potential tariff reductions with Vietnam" from reference 3, and "Lululemon shares climbed Friday morning after Trump hinted at Vietnam tariff cut" from reference 4).

Make sure to adhere to the format requirements: bold headings, citations at the end of sentences, and visualizations immediately after the relevant paragraphs.

Conclusion: Lululemon (LULU) and Nike (NKE) have outperformed during the market downturn due to tariff relief optimism, strong earnings beats, and strategic supply chain adjustments. Below is a detailed breakdown:

1. Tariff Developments: Catalyst for Recovery

Both companies saw significant rallies after U.S.-Vietnam tariff negotiations emerged:

Nike: Shares surged 5.9% on April 4, 2025, following reports of potential tariff reductions¹. Vietnam accounts for ~50% of Nike’s production, making it critical to mitigate costs².
Lululemon: Stock rose 3.9% on the same day, driven by its 40% reliance on Vietnam for manufacturing³.

LULU Trend

2. Earnings Resilience Amid Macro Headwinds

Nike: Q3 FY2025 revenue fell 10% YoY to $11.12B, but EPS beat estimates by 29.82% (six consecutive beats)⁴. Greater China sales declined 13%, but digital sales grew 15%⁵.
Lululemon: Q4 FY2025 revenue rose 13% YoY to $3.6B, with EPS beating estimates by $0.29⁶. Guidance for FY2025 ($11.15B–$11.3B) reflects 5–7% growth, though below consensus⁷⁸.

3. Strategic Initiatives to Offset Risks

Nike: Collaboration with Kim Kardashian’s Skims brand⁴ and focus on women’s activewear (a $10B+ market) helped diversify revenue⁹.
Lululemon: Expansion into golf, tennis, and running gear⁶ and price increases (15–20% projected by 2025)² aim to offset supply chain costs.

4. Market Sentiment & Technical Factors

Short-Term Momentum: Both stocks rebounded sharply after tariff news, with Lululemon’s RSI at 79.93 (overbought)¹⁰ and Nike’s 50-day SMA at $31.55 (bullish crossover)¹.
Institutional Confidence: Analysts project 39.7% upside for Nike¹ and 26% upside for Lululemon¹¹, driven by AI-driven retail and supply chain resilience.

5. Risks to Monitor

Tariff Uncertainty: Escalating U.S.-China tensions could reignite volatility¹².
Supply Chain Costs: Lululemon’s Luon fabric dependency on Vietnam² and Nike’s $500M R&D investment¹³ require sustained demand.

Final Take: Lululemon and Nike’s ability to navigate tariffs, coupled with strong earnings and strategic pivots, positions them as relative winners in a volatile market. Investors should watch for further tariff developments and monitor pre-market turnover (>5M shares) for momentum signals¹⁴.

Source:

1. Nike (NKE) Shares Surge on Positive Vietnam Trade Developments