Under Armour (NYSE:UA) reports Q1 earnings (and, perhaps more importantly, issues Q2 guidance) tomorrow morning. Expectations are mixed -- analysts like Morgan Stanley and Piper Jaffray have warned that UA might be losing steam, most other analysts remain bullish, with Buy ratings and high price targets for the stock. Social data presents a similarly mixed picture.
According to TickerTags data, tweets with the term "Under Armour" are up 9% year over year. That's a far cry from UA's projected 28% revenue growth, but it's also an improvement compared to the past couple quarters, which saw year over year declines in tweet volume.
One of the biggest factors for UA in the first quarter was footwear, with tags like [under armour + shoes] and [curry + shoe] up significantly:
The "Curry" in that tag is obviously Steph Curry, the NBA superstar whose Golden State Warriors just set a new all-time record for NBA regular season wins. Curry's popularity is as high as ever, and even bearish Morgan Stanley analyst Jay Sole acknowledged back in March that Curry was the biggest risk to Sole's bearish position on UA. "This will be especially true if the Curry effect is so strong, he puts a halo over the entire brand which benefits its apparel and running footwear business," Sole wrote.
The "Curry effect" is boosting UA not only in the United States, but also internationally, according to FBR's Susan Anderson, who pointed out that a fall 2015 tour by Curry throughout Asia may have laid the groundwork for significant growth in those markets. International sales are a fairly small factor for UA (at just 11.5% of total revenue in 2015), but they also represent the best area of growth potential for the company.
In addition to Curry, UA athletes Cam Newton and Jordan Spieth have also attracted a lot of attention in early 2016, although both present a bit of a mixed bag: Newton's Carolina Panthers lost the Super Bowl in February, and Spieth collapsed at the Masters earlier this month.
Of course, the success of UA's athletes is no secret to the market, and much of the Curry effect (and the effects of Newton, Spieth, and UA's other superstars) is likely priced into the stock. So even if UA reports a strong Q1 driven by the Curry effect, it's unclear whether the market will care.
Another potential drag on UA's Q1 performance is weather, which was unseasonably warm in much of the United States. Research firm OTR Global reported that sales of UA's cold weather gear were down in January and February, although the weather did appear to help apparel sales in March. But if retailers had to heavily discount (or send back to UA) a lot of excess cold weather inventory, the market may punish UA, even if the warm Q1 was an El Nino-created anomaly. This theory is supported by tweet volume data for the tag "coldgear," which was down significantly compared to last year:
Put it together, and it's not clear how the market will respond to UA's report tomorrow. In past quarters, social data has been a strong indicator of UA's performance, but this time around, the mix of positives and negatives appears to be too much for one to take a strong position.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.