lululemon athletica is now carrying the heaviest short book it has seen in years, while options traders and the lending market are both telling a more nuanced story than the headline figure suggests.
The short-selling pressure has not let up since the previous note. Short interest has climbed to 13.8% of free float, up another 9.6% on the week and 55% above where it stood one month ago. That monthly acceleration is the standout: bears added roughly half a position again since mid-August, and the pace has not slowed. The ORTEX short score has ticked up to 61.7, continuing a nine-session climb from 57.0 in mid-September. That score ranks in the bottom decile of the universe (short score rank: 10), meaning the market's bearish conviction on LULU is more extreme than on nine out of ten stocks. The borrow itself remains almost frictionless: cost to borrow is 0.43%, actually down slightly on the week, and availability, while tighter than a month ago, is still a generous 280%. There are nearly three shares available to borrow for every one already borrowed. Shorts are not scrambling to find stock. They are adding because the fundamental case for being short is drawing them in, not because they are chasing scarce supply.
Options positioning does not corroborate that bearish view. The put/call ratio is 0.67, marginally below its 20-day average of 0.69 and sitting near the bottom of its 52-week range. That range runs from 0.61 to 0.95, and the current level is close to the call-dominated end. Options traders are not positioned for a crash. The z-score of -0.38 means put demand is fractionally lighter than usual. Heading into an earnings print on December 10, that gap between the short book and options sentiment is the clearest tension in the setup.
The Street is broadly sceptical but not uniformly bearish. After the September 3 earnings selloff, which sent the stock down 16% in a single session and 19% over the subsequent five days, analysts moved swiftly to cut targets. Goldman Sachs lowered its target to $95 from $111 while holding Neutral. Barclays moved to $95 from $113, also Equal-Weight. Piper Sandler trimmed to $80 from $110. BMO Capital initiated with Underperform and a $70 target. BNP Paribas, already at Underperform, halved its target to $44. With the stock now at $96.87, down nearly 20% over the past month, the consensus mean target of $104.91 implies modest nominal upside, but the distribution of targets is wide and skewed heavily toward hold-or-sell ratings. The EPS momentum scores tell the same story: the 30-day and 90-day EPS momentum factors rank in the 5th and 7th percentiles respectively, among the weakest in the market. The bear case centres on Q2 Americas comparable sales falling 12% in constant currency, a materially lowered FY26 outlook implying revenue down 5% to 7%, and a CEO transition that reduces visibility into when the earnings trajectory bottoms. The bull case rests on brand durability, a still-intact international store network, and management's stated plan to reallocate inventory and lift marketing spend to restore traffic.
Dennis Wilson, the company's founder, remains on the activist register. His latest Schedule 13D/A, filed September 3, disclosed an 8.6% stake, up from 8.4% in the prior filing. That makes him both the second-largest institutional holder in the snapshot and an activist on the SEC 13D register, a notable overhang given the ongoing CEO transition and the pressure on the business. As always with 13D/G disclosures, the position is as-filed; a holder below 5% may exit without further disclosure, but Wilson's position is well above that threshold. BlackRock added roughly 540,000 shares as of August 31, and UBS Asset Management added 452,000, suggesting some institutional buyers are accumulating into the weakness. The previous quarter also saw Fidelity International add a position of over two million shares.
The December 10 earnings date gives the bear-bull debate a concrete calendar marker. With short interest at a multi-year high, borrow cheap enough to accommodate more selling, and the options market sitting closer to call-heavy than put-heavy, what matters next is whether evidence of product and traffic improvement emerges before the print, or whether the data vacuum between now and then continues to draw in fresh shorts.
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