Lululemon Athletica (NASDAQ:LULU) stock price continued its strong downward trend, reaching its lowest level since December 2018, with its market capitalization falling from $67.2 billion to $14.3 billion today. 

The stock has plunged amid concerns about its growth trajectory amid the rising competition from companies like Nike (NYSE:NKE), Gap's (NYSE:GAP) Athleta, Vuori, and Alo Yoga. 

Lululemon's growth has slowed substantially in the past few years. Gone are the days when it constantly experienced double-digit revenue growth. Its most recent earnings revealed that its revenue rose by just 1% in the fourth quarter to $3.6 billion. 

Its Americas business experienced a 1% revenue decline, which was offset by its international business, which grew by 17%. Its annual revenue rose by 5% to $11.1 billion, helped by its international business, which grew by 22%.

Worse, analysts don't expect substantial growth in the coming year. Analysts predict that its annual revenue this year will be $11.48 billion, up by 3.3% YoY, followed by $11.9 billion in 2027. 

The hope, therefore, is that Heidi O’Neill, the new CEO, will reinvigorate its revenue growth and profitability. Her plan is to launch new and differentiated products and elevating its experiences. Precisely, she is focusing on new products by Jonathan Cheung, the creative director.

Wall Street analysts are relatively pessimistic about the company, with most of them reducing their targets. JPMorgan's Matthew Boss slashed his target from $196 to $173, while Baird's Mark Altschwager cut from $190 to $170. Other analysts who slashed their LULU stock forecasts were from companies like Citigroup, BNP Paribas, and Stiffel.

LULU Stock Has Become A Bargain And Oversold

The lower growth and analysts’ estimates explain why the company has become a bargain, which is why Elliot Management bought a $1 billion stake. Its forward price-to-earnings ratio has moved to 9.68, much lower than the five-year average of 30. 

The stock has also become one of the most oversold in the S&P 500. Its Relative Strength Index has fallen to 24, its lowest level since August last year. The last time it was this oversold, it rallied 40% and peaked at $226 in December.

While the downtrend may continue, there is also a possibility that bargain hunters will swoop in and buy the dip. The potential catalyst for this would be its upcoming earnings, expected on June 4.

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