Lululemon (NASDAQ: LULU) stock price has just formed a highly dangerous chart pattern pointing to more downside. After peaking at $515.50 in December, the stock has plunged to $350, a 31% decline. 

Lululemon Athletica is one of the best-known apparel retailer in the world. The company is best-known for changing the athleisure industry and taking it mainstream.

The company’s performance has been great over the years as demand for its products has jumped. As a result, its stock jumped by over 670% in the past ten years and by 103% in the past five.

Its annual revenues have soared from $3.9 billion in 2019 to over $9.6 billion last year. Its profitability also surged in this period as it rose from $645 million to $1.5 billion. Analysts believe that this trend will continue, with revenues coming in at $10.1 billion and $11.8 billion in 2024 and 2025, respectively.

Recently, however, the company has come under intense pressure after it published weak financial results and guidance. Revenues jumped by 16% in the fourth quarter to $3.2 billion, helped by its international segment.

The company’s forward guidance was weakeer than expected. Management expects that its Q1 revenue growth was between 9% and 10% while the effective tax rate will be between 29% and 29.5%. The tax rate was about 28% in the last quarter. 

Still, fundamentally, the company has its strengths. It has one of the best brands in the athleisure industry and is expanding its global footprint. The company also has strong margins, which will continue expanding as it slows its store openings.

Further, the management is still rewarding its investors through share repurchases. It bought back 1.5 million shares worth over $556 million last year. The total outstanding shares have dropped from over 125 million in 2021 to 121 million.

LULU chart by TradingView

Turning to the daily chart, we see that the LULU share price made a down-gap after publishing its financial results in March. It formed a gap and go pattern and has not filled it yet.

Recently, the stock has formed a death cross pattern, which forms when the 200-day and 50-day moving averages cross each other. This pattern is one of the most bearish ones in the market.

The stock has also formed a break and retest pattern by retesting the crucial resistance point at $355, its lowest point in October last year.

Therefore, the outlook for the Lululemon share price is bearish, meaning that it could retest the support at $300 ahead of its earnings on June 6th.

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