Via Reuters:
Shares of sports apparel maker Under Armour (UA.N) dropped nearly 6 percent on Monday, a day after defending champion Jordan Spieth lost the Masters golf tournament in a shocking meltdown.
Spieth last year signed a 10-year agreement to wear the No. 2 U.S. sportswear maker’s golf shoes and other clothes, and his collapse in Sunday’s final round appeared to be partly behind the drop in the company’s shares.
Also hurting the stock, Morgan Stanley said in a note that Under Armour, a leader in “athleisure,” appears to be losing market share for the first time in three years.
But Spieth’s loss is unlikely to dent Under Armour’s growth momentum and the stock’s selloff may reflect the sports preferences of many on Wall Street, said BB&T analyst Corrina Freedman.
Under Armour has signed endorsement deals with a number of high-flying professional athletes, which have helped elevate its profile and boost sales.
Impressive performances by two other major Under Armour endorsers – National Basketball Association point guard Stephen Curry and National Football League quarterback Cam Newton – have not sparked major rallies in the company’s stock.
Under Armour also sponsors English soccer club Tottenham Hotspur, which is second in the Premier League.
“More Wall Street traders watch golf than watch basketball, it would appear,” Freedman said.
This is an excellent lesson for new investors to the stock market: it can be extraordinarily fickle and volatile in the short term, often for seemingly no apparent reason.
Here, however, is also a lesson in how powerful television branding can be. Golf allows for branding on television in ways even NASCAR can’t. Seeing dozens of corporate logos on a car traveling 200 mph isn’t quite the same as looking at one logo on a golfer’s hat, shirt, glove, or bag. If said golfer is one of the best in the world and leading a major tournament for three days, he gets a lot of exposure. Golf is so slow moving that it’s often akin to the company just being able to hold a sign in front of a camera. This is why even lower-tier PGA pros get deals: they’re essentially walking billboards for the spectators at an event too. If they happen to have a good weekend and get some TV time, the sponsoring company is in the bonus round.
Still, the Wall St. panic after Spieth’s second place finish is silly. After all, he did still make $880 thousand for his “off” day on the course, and Under Armour still got all the TV time.
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