Entering text into the input field will update the search result below

Under Armour Won't Stage A Comeback

Mar. 09, 2020 12:43 PM ETUnder Armour, Inc. (UA), UAA58 Comments
Colin Tedards profile picture
Colin Tedards


  • Missteps have caused the brand to stall in North America.
  • The company is cutting back on marketing initiatives.
  • Competitors are creating bold, award-winning marketing campaigns.
  • Under Armour lacks the aggressiveness it once had.

Under Armour recently reported a disastrous quarter and guidance that sent the stock crashing to 52-week lows. I can't say that I am surprised, as this is a stock that I've been negative on since 2016.

In August 2016, Under Armour stock was trading around $40 per share when I penned the article titled The Race Under Armour Will Lose. The article highlights that despite all the positive results Under Armour achieved, its brand image was weak in a diverse state like California and was going to be chewed up and spit out in favor of brands with far more "street cred" like Nike (NKE), Adidas (OTCQX:ADDYY), and others.

Later in 2016, I highlighted how Under Armour blew nearly $1 Billion on fitness apps in the article Under Armour's Billion Dollar Blunder. Needless to say, the apps haven't delivered for Under Armour, or investors, and is evidence of how poorly Under Armour has executed.

Since then, the stock has lost over 50% of its value and has essentially lost its momentum in the marketplace and with investors.

Under Armour logo

Source: Bloomberg

What Happened?

Certainly, I look back and wonder how I can repeat this type of forethought on other investments, as Under Armour's weakness drove me to buy more shares of Nike, one of the best-performing stocks I own.

However, if you read the comments of the articles I wrote in 2016, they are filled with bullish readers who seemed blind to what was about to come.

First, not all of Under Armour's struggles are self-inflicted. Stephen Curry, the company's flagship athlete, has lost some of his momentum, in part due to injuries and also just not being as fresh of a star in the public's eye. Jordan Speith, the company's flagship golfer, has struggled in recent years and is having a career that isn't uncommon in professional golf. The number

This article was written by

Colin Tedards profile picture
Host of The Investor Channel on YouTube. Husband and father of 2. I started investing in 1997. Twice a week you can catch me teaching Finance & Economics to middle school kids.

Analyst’s Disclosure: I am/we are long NKE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (58)


Curious if the writer ever bought back in... seems like they may have steered the ship in the right direction finally

Colin Tedards profile picture

@Just Trying to Make a Living Good question, I have not stepped into this one - primarily because my Nike investment has run a considerable amount to where it doesn't really make a lot of sense to add this name as well. However, it would have been a nice move - UA's done a nice job since Plank left.

Lord Baltimore profile picture
Colin, Great followup article. I remember your insights from 2016 well. Was short UA also at the time. Covered too soon to enjoy this dip below $10 though. I will concede UA seems pretty hip with the over 50 suburban Dad crowd but that's not the demo they are shooting for I don't think. That demo might make up a large percentage of their shareholders though (and the bulls on SA)!
Colin Tedards profile picture
Thank you! I remember your contributions back then as well - hope more trades work out like this one.
won't lean to Nike due to the Kaepernick stuff. UA has great clothes, I hope they turn it around.
Moses1443 profile picture
Colin, what’s your take on Hanes (HBI)? They have a ton of debt, but are chewing through it. Takeover potential (of UA by HBI) seems near zero, but more stupid things have happened in the past. Cheers, Moses

PS. Long HBI and while the boxer briefs are comfy and long lasting, the long equity position leads to chafing most days...ha.
Colin Tedards profile picture
Haha, yes the chart looks brutal. Since you're already in, there's not much you can do - personally I'd like to see some kind of reversal or bottoming in the price before I'd start a new position. Personally I don't like buying something because it might get taken out because it caps upside. If you see a bottoming form, and the fundamentals keep improving - then it's worth buying more. But just like UA - it's going to take some time and you've got to be patient and wait for buyers to emerge. With the coronavirus wipeout, I'd focus on higher quality names since they'll bounce back faster. Hope that helps. Appreciate the comment.
Moses1443 profile picture
It’s (the comeback, that is...) gonna take forever in the case of retail. It’s too bad Hanes can’t fashion masks outta undies. They’ve been smart enough to gobble up the supply chain....ooh! Or, with the way people are buying up TP, maybe sell rolls of disposable super absorbent cotton wipes. <Municipal sewer staff would love that!> Trying to apply humor to a humorless market that will eat our lunch again tomorrow...regards, Moses
good riddance, to UA and all the virtue signaling companies
yeah, you don't wanna here their opinion, yet you gave your own in your protest. well we don't wanna hear yours either.
Dutchref’s ironic post is...ironic.
gordonq profile picture
Anyone remember Under Armour promoting transgender sports and the inherent unfairness in many of these matchups? nationalcenter.org/...
I remember reading all these stories and comments on SA how Under Armour was gonna kill Lulu.
At what point do retailers such as UA consider going private at these levels? Or, would a PVH be interested?
Colin Tedards profile picture
That's a good question. When Plank stepped away, part of me wondered if it's a plan to take it private. Either way I don't think it would be super beneficial to a common shareholder since it basically caps your upside to a buyout price. I still think the valuation is a tad bit rich and with restructuring in progress - it wouldn't be super attractive, but who knows. Certainly will be interesting to follow since there's likely more to come from the SEC investigation, restructuring, etc.
just saw Wellington mgmt. just reported an 8% stake in under armour. they must not have read this article.
time to gamble and buy ua at $10
some activist will get involved. you said it yourself. good clothes bad mgmt.
Colin Tedards profile picture
Buying because they have good clothes would be the same mistake the people made in 2016 that said I was crazy then. The valuation still stinks - especially since they aren't growing sales and are having to restructure (again).

Besides, buying a stock simply because an activist *might* get involved isn't a winning strategy.
investing is a game of opportunity costs. right now you can get UA at 10. vs what?
easy for someone to write an autopsy article on a stock that is down 75%. harder to tell the reader what will do better than this going forward. oil? banks? commodities? health care? well, we are all waiting. what will outperform this going forward from this point in time?
@dutchref: Sounds like you need to study up on UA. A few years ago founder and former CEO Kevin Plank rearranged the share structure to very specifically prevent any activist shareholders from getting out of line. Plank’s shares hold 10 to 1 voting rights, thus assuring that he retains control of things without the threat of other shareholders revolting.

This audacious bit of corporate governance has - overall - been bad for the company, and is a great example of why you may want to think twice before investing in a “public” company where the “public” cannot effectively exercise their own corporate governance due to a monopoly on voting rights.

If you buy at $10, set a tight stop-loss. We likely haven’t seen the worst of the Corona virus fallout yet, and probably won’t for several more weeks (at least). Also have a quick exit strategy, because we’re entering into the end of Q1. UA will report Q1 earnings 30-45 days after, and I can’t imagine they’re going to have good news. Most likely they will again revise full-year guidance downwards. That’ll be good for at least another 10% drop.

You know what they say about trying to catch falling knives.
Good summation, Colin. It’s difficult to pin down exactly what is hurting UA the most, because the company’s problems are multiple (and growing). I suppose the single largest problem is just the brand itself. As you wrote, branding is mostly about effective marketing. And in the marketing lane, UA simply can’t compete with juggernauts like adidas and Nike. UA doesn’t have the budget or people to even begin to catch-up with its better funded, better managed competitors.

As for the stock price, this latest decline has been written on the wall for awhile. As an apparel and footwear company UA should have NEVER been trading at such insane P/E multiples. I’ve been saying for years that when the market finally hiccup’d, UA was going to take a bigger beating than most simply because its valuation was in the stratosphere. I’ll never understand why people thought a P/E of 60, 70 or 80+ was totally normal for a struggling apparel and footwear company. It wasn’t. Heck, it was excessive even before the 2016 decline started. And now UA investors are being reminded of an age old lesson: when a market correction hits, the more overvalued a company is, the more it declines relative to other companies in the same industry.

A few months ago here on SA I warned that buying UA at or above $20 was dangerous. While UA may now look tempting to some at less than $10, in this market I still wouldn’t touch it with a 10-foot pole. Trying to call a bottom right now is a fool’s game. We already saw this when there was heavy buying at $15. That was just about a week ago and those speculators are now already down 33%. They’ll need a 50% rally from current prices just to reach break even. Ouch!

Combined with the notion that the fundamental UA business may be irretrievably broken, only gamblers need to be buying this stock right now. With money they don’t mind losing, too. Because I believe there is every possibility that UA isn’t able to get it together.

Things could be worse though. You could be Stone Fox Capital, who about a month ago called UA a “bargain” at $19. Double ouch!!!
Colin Tedards profile picture
Definitely, always enjoyed reading your commentary on the other articles as well. I didn't touch on it, but have to imagine the virus is going to kill any momentum they had overseas - at least for the next quarter or two. If it becomes a value stock, I'd be the first to get excited about it, but it's still really far from it. Maybe under $5 it'd be interesting.
Nike has lost me as a buyer for life due to them supporting the racist Kapernik. UA is and has always been a more quality product then Nike and will be just fine over time.
Colin Tedards profile picture
Respectfully you're not their customer then. I don't necessarily agree with kneeling - but I can recognize a good ad. Putting your personal feelings aside is step one to being a great investor. Quality products don't drive sports apparel companies - marketing does.
'Quality products don't drive sports apparel companies' don't agree.

Lulu has great products and does not market like Nike. When was the last time u saw a Lulu TV ad or print ad or web ad?

I jog and workout and would never buy Nike. Over priced cheap products.
Colin Tedards profile picture
I view LULU differently than UA and NKE. LULU doesn't sponsor teams, athletes, leagues, etc. UA and NKE do. To start to compare LULU to NKE is like comparing the Yankees and Lakers. Sure they both are sports teams, but they are different.

Once you cross over into marketing with teams/athletes like UA has - you have to curate that effectively. Under Armour spends millions of dollars per month to sponsor athletes/teams - and if you don't get it right we see what happens. LULU plays on a different field, simple as that.
malibumiler37 profile picture
Have some nice products, but the greatest product in the market, can't make up for horrific marketing & terrible branding. What a waste of potential
Colin Tedards profile picture
I agree the products are actually quite nice, especially on the apparel side - but they've whiffed on the endorsements/marketing.
UA started solely as a product company. Footballers wanted the product. Long before any hardcore marketing initiatives. Company was built on a tight t-shirt that was not first to market.

I'll argue all day long that the product is not up to snuff. Poorly led global product merchandising with price points, fits, colors that miss the consumer. Bad sourcing, development, quality and fit. Design is generally good.

The lousy marketing was magnified when it couldn't do all the heavy lifting to save the product that was substandard.
Ever since the company dropped Sarah Bowmar for no good reason, they've been on a downhill slide.
El Financeiro profile picture
Thx. Unfortunately I’m coming to the same realization with under Armour. It’ll be tough for them to get back. Can’t seem to see any tailwinds.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

About UA

SymbolLast Price% Chg
Market Cap
Yield (TTM)
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on UA

Related Stocks

SymbolLast Price% Chg
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.