3 to Watch This Week

Last week the White House confirmed plans to host a UFC event. It will be between the White House and the Lincoln Memorial as part of Independence Day celebrations in late June of 2026. This weekend, Canelo Alvarez and Terrance Crawford will box live on Netflix.

 

The link between these two events is TKO, which owns UFC. TKO is directly involved with the White House event and is also connected, though less directly, to the Alvarez-Crawford fight, where its role can be confusing. The White House cage match benefits Paramount-Skydance ($PSKY), which recently paid TKO $7.7b for streaming rights to UFC fights over the next 7 years.

 

Although TKO is not the official promoter for Alvarez-Crawford, the promotion is led by UFC’s Dana White and Zuffa, both TKO-related entities. TKO is likely to receive some revenue but is more invested in long-term outcomes. The key issue remains whether a streaming boxing match can attract viewers during college football season.

 

TKO is an arms dealer in the streaming war over live sports content. Tyson-Paul was watched by 38 million people in the US and another 65 million worldwide last year. It was the biggest fight in history. Alvarez-Crawford doesn’t have the same kind of curb appeal for casual viewers.

 

TKO will present at Goldman’s Communicopia event on Wednesday. The stock has gone up because investors expect strong future cashflows from UFC and TKO. Still, it’s not clear if those hopes are realistic. Netflix’s investment in the Alvarez-Crawford fight may depend on international viewers, since boxing’s popularity in the US is uncertain. To judge how TKO and Netflix are doing, we’ll need to see real engagement and revenue numbers after these big fights.

 

Athleisure was declared dead last week, and there appears to be little regret, according to slightly gleeful coverage of Lululemon's miss in The Economist and the Wall Street Journal.

 

 

Last week I said I’d buy $LULU at $150. To clarify, that was not a firm commitment. Lulu has been sold consistently for the past six months due to slowing North American sales. There is also a growing backlash against leggings in general.

 

Typically, a contrarian approach might seem attractive following Lulu’s selloff and American Eagle’s surge. However, this is not the case in the current market environment. AEO can consolidate but the stock is going higher, barring a huge misstep.

 

 

 

Denim is doing well, and the Macke Denim Index could still go higher. I’m still positive on jeans, but I’m staying away from Lulu until there are clear signs of a turnaround in North America. Margins are shrinking, sales are getting tougher, and discounts are more common. Wall Street isn’t sure how to value Lulu now that its growth has slowed.

 

Last week, I talked about Chewy and Lovesac as retail earnings wrap up. The quality of the companies reporting generally goes much lower after Lululemon and the pattern holds true again this year. 

 

For example, Gamestop reports this week. Don’t expect a breakdown of GME earnings as I’m not even sure what the company does anymore. Kroger is expected to post good results on Thursday, but its stock is shaky because people are spending more carefully. With Walmart and Amazon stepping up in grocery delivery, Kroger needs to find clear ways to grow and compete with these bigger companies.