The Apple way seeks proprietary advantage. All intellectual property is tightly controlled. There is a price for everything. The brand absorbs the savings Moore’s Law brings to the technology inside it, and profits.
The Google way seeks market growth. You offer an open-source method that allows others to benefit. It’s all free to try. You grow with the market.
In the world of athletic technology, Under Armour Inc (NYSE:UAA) has chosen the Apple way. The market is killing it for this. Its offerings are being called “too technical” and teens are said to prefer arch-rival Nike Inc. (NYSE:NKE).
Really? Under Armour Is a Dog?
InvestorPlace writers agree. There’s a “glut” of athleisure apparel, writes Joseph Hargett. UAA stock has a “serious branding problem,” writes Vince Martin. Think twice, writes Will Ashworth. It’s “still a loser,” writes Josh Enomoto.
I can’t argue with them.
Since its April 2016 stock split, meant to give founder and CEO Kevin Plank the control Google’s founders have over the company, the shares are down 56%.
The problem isn’t in the financials. Under Armour’s December quarter showed revenue of $1.305 billion, up from $1.170 billion a year earlier. Net income only fell marginally, from $105.6 million in 2015 to $103.23 million a year later. Debt is down, and cash flow is up.
Yet the market has reacted as though UAA stock were going out of business. Shares fell from $29 to less than $22 immediately after the report came out, and opened for trade Apr 13 at $19.28. They need a change, and soon, writes James Brumley, because the March quarter looks terrible, with a loss of three cents per share expected, albeit on revenue of $1.14 billion.
The change Under Armour needs is simple. Plank needs to find his inner Google.