If you're still a believer in Crocs (CROX -0.16%) despite the stock's sell-off since last year, you're not alone. Enough bulls stepped back up to the plate in mid-2022 to take a big bite out of what was at one point a 70% loss for the stock. The shares are now down a more modest 50% from last year's peak price. Wall Street's analysts still collectively consider the stock a buy as well, even with the recent rebound.

You may not want to be too quick to jump back on board, however, if you've been mulling a new position in Crocs. The company might not be on quite as firm a footing as it may seem on the surface.

More red-hot growth expected

Crocs makes ultra-comfortable funky foam shoes. Their lack of fashionableness, in fact, may be fashionable in and of itself... anti-fashion telling the rest of the world the wearer is more interested in function than form.

Crocs shoes were all the rage when they were relatively new in 2007. But that fad came to a screeching halt by 2008. Then the pandemic happened. Now stuck at home and no longer dressing for work, people sought out comfortable clothing again. They rediscovered Crocs.

Last year's fiscal top line was a record $2.3 billion, up 67% from 2020's then-record-breaking figure of $1.4 billion, despite plenty of logistical challenges linked to COVID-19 shutdowns. The company's on pace to do $3.5 billion worth of business in 2022, which would mark yet another record-setting year.

Crocs management isn't afraid it will hit the same wall it did in 2008 either, despite working with the same basic product that it was then. Indeed, CEO Andrew Rees has repeatedly said in recent months that he expects to see Crocs driving $5 billion in annual revenue by 2026.And perhaps it will.

As the old adage goes, though, expect it when you least expect it. The company may have evaded a 2008-like implosion thus far. That doesn't mean one isn't still in the cards, given everything else going on in the background.

Prospective challenges ahead

Is this time different? Maybe. Whereas Crocs shoes were a flash in the pan in 2007, the company's strategy is certainly different this time around. Collaborations with high-profile fashion names like Vera Bradley are now the norm, as are partnerships with celebrities such as Jimmy Kimmel and Justin Bieber. These deals give consumers perpetually new reasons to buy the product.

In the meantime, the company has made a point of promoting how its footwear can be customized and uniquely decorated by each of its customers. Again, the effort bolsters sales.

But never dismiss the market's ability to change its mind with little to no warning. Remember, there was a time when most people currently over the age of 40 were wearing -- or at least wanted to wear -- Members Only jackets. Good luck even finding one now. Sweaters tied over your shoulders, the "Abercrombie look," cargo pants, form-fitting track suits, and Uggs were all must-wear apparel at one point. Now they're all gauche (although Uggs are enjoying something of a resurgence; it remains to be seen if it will persist).

Connect the dots. The fashion industry is built on the model of perpetually swapping out old looks for new ones. Consumers are more than happy to play their part too, perpetually seeking out "something else." Crocs are still in vogue right now, but there's no assurance they will remain so. And there's little to no warning when fashion trends shift.

Then there are the more finite stumbling blocks, like the world's return to physical workplaces. Data collected by Microsoft early this year -- when COVID-19 infections were still going strong -- indicated that about half of all U.S. employers expected their workers to return to their offices within the year.

Broadly speaking, that expectation has firmed up despite workers' resistance. The vast majority of employers are now requiring at least some degree of in-person/in-office work. If a recession starts picking off jobs, don't be surprised to see even greater willingness from employees to physically return to their place of work. This shift back toward pre-pandemic norms will likely stifle at least some comfort-clothing purchases.

Don't look past the advent of new competition, either. Whereas no other major manufacturer was willing to enter the fray in 2007 (not knowing if the fad would last), the market's fascination with funky foam clogs has been persistent enough since 2020 to draw out competitors. Adidas and Vans now have their own entries in this race, while Nike and Under Armour are taking indirect stabs at Crocs' dominance of the market.  

None of these alternatives are apt to dethrone Crocs as the leader of the ultra-comfortable foam clog space. Combined, though, they could collectively make a sizable dent in it.

Keep your expectations of Crocs in check

This isn't to suggest Crocs is doomed. It's simply to point out that Crocs isn't as quite as Teflon-tough as many investors may be presuming.

Perhaps the biggest hazard ahead for Crocs stock is the exceedingly lofty investor expectations spurred by the past couple of years' worth of growth. We've never actually seen Crocs up against true competition. We've also never seen how demand for Crocs holds up in an environment that's not affected by a global pandemic. But both are challenges no investor can afford to ignore now.

Maybe this will better illustrate the reason for caution. While most of Wall Street likes the stock well enough to deem it a buy, the analyst community -- unusually -- has been willing to let the stock rally past the consensus target price of $93 without raising that target. It's a red flag that they're not quite as on board with Rees's growth expectations as investors currently are.