Coming Up Short: Investors Bet On Under Armour Plunge

Hedge funds and others “are betting [Under Armour] stock is headed for a fall,” according to Stanley Holmes of BUSINESSWEEK. Some 7.1 million shares, or 25% of those available to the public, have been “sold short, making it one of the biggest shorts on Wall Street.” While Under Armour management, which declined to comment, “figures it will continue to boost earnings” at 20-25% a year, “skeptics think the company’s aggressive expansion plans and rich valuations make the stock vulnerable.” Holmes notes the company’s plan to introduce a new sneaker by this fall or early ’08 marks “a major departure from its original blueprint for growth.” Under Armour has gained 20% of the football cleat market, but the “more mainstream footwear categories ... are already crowded” with companies like Nike, adidas and New Balance. Susquehanna Financial analyst John Shanley said Under Armour “did extremely well in athletic-performance apparel because they were the first to market. It’s a different story with footwear.” Shanley added Under Armour’s price-to-earnings ratio “is causing some anxiety among investors” (BUSINESSWEEK, 4/30 issue).