This Could Mean Big Gains for UA Stock
Under Armour Inc (NYSE:UA) is one of the few companies that haven’t disappointed the Street’s expectations this year. One new development at the company spells more good news for UA stock in the coming days.
Best known as an apparel and footwear company, Under Armour generates more than two-thirds of its revenue from apparel, while footwear makes up most of its remaining revenue mix. But company CEO Kevin Plank wants to redefine Under Armour for the world.
Plank understands that the market dynamics are shifting fast. Traditional business models are evolving with the tech boom. Speaking with Fortune magazine, the CEO posed a rhetorical question to the interviewer, “What are we going to do if Apple decides they’re going to make a shirt, or they’re going to make a shoe?”
Plank has a contingency plan: “Why don’t we beat them to it?” (Source: “Under Armour CEO Sees Technology As Company’s Destiny,” Fortune, February 8, 2016.)
Under Plank’s leadership, Under Armour is making a full-blown foray into the technology industry with new fitness tracking wearable technology devices that compete with the likes of Fitbit Inc.
Under Armour launched a complete health tracking system last month, which marked the company’s biggest wager in the tech world. The “Health Box” includes a scale, a wearable fitness tracking band, and a chest band that tracks heart activity.
The complete system feeds all your activity data into Under Armour’s health apps, which you can access and read on your smartphone. Under Armour acquired these fitness tracking apps over the last two years.
In effect, Under Armour is creating its own fitness device ecosystem.
“Moving toward this idea of biometric measurement, and an understanding of self, is I think, one of the waves of the future,” said CEO Kevin Plank. (Source: Ibid.)
The company currently faces stiff competition from heavyweights like Nike Inc and Adidas AG, both of which have separately tried their luck in technology wearables but haven’t found significant traction from sports enthusiasts. However, Under Armour might succeed in making a mark under Kevin Plank’s leadership.
Separately, Under Armour has recently signed on five of the most valuable players in all of the major American sports leagues. Most notable is Stephen Curry, whose endorsement has greatly helped the company in reporting stellar results in the latest quarter. Under Armour’s footwear segment posted robust double-digit growth on the back of strong sales of “The Curry One” shoes. Yes, if Nike has Jordan, Under Armour has Curry!
Holders of UA stock may be in for a positive surprise this year as the company undertakes these interesting ventures.