Have you ever heard the term “sucker’s rally”? In finance, a sucker’s rally is used to describe a situation where a stock rises noticeably in value, but the fundamentals haven’t changed at all. In other words, it’s a fundamentally unsupported rally.

Almost always, sucker’s rallies end in a big drop.

With that concept in mind, lets look at athletic apparel company Under Armour Inc (NYSE:UAA). From the beginning of December to mid-January, Under Armour stock rallied more than 20%.

But why? There was some optimism regarding forthcoming tax reform, but the S&P 500 rose only 4% during that time frame. There was also a bunch of retail optimism, but the SPDR S&P Retail (ETF) (NYSEARCA:XRT) rose just 6% during that time. And there was also bullishness specific to athletic retailers, but peer Nike Inc (NYSE:NKE) rose just 8% over that time, while adidas AG (ADR) (OTCMKTS:ADDYY) actually dropped.

So, what exactly has driven Under Armour stock’s stellar performance? Well, nothing really.

Is this a sucker’s rally? I think so. And it looks like the suckers finally bought in, meaning this rally is winding down.

Under Armour Growth Narrative Remains Broken

Despite the stock’s huge out-performance over the past several weeks, not much (if anything) has changed to dramatically improve Under Armour’s fundamental growth narrative.

This is a company still getting its butt kicked by a pioneering, hungry Adidas and a domineering, newly aggressive Nike.

Over the past several years, Adidas transformed from an athletic performance company to a fashion company and, in so doing, started rapidly stealing market share away from Nike. Nike took note, and is now aggressively fighting back by starting its own fashion evolution. In essence, the stage is set for a massive tug-of-war between these two innovative athletic retail giants over the next several months and years.

Under Armour is a casualty of this tug-of-war. Under Armour makes great athletic apparel, but they don’t make fashionable athletic apparel. The company has continually emphasized performance over fashion. There is no dearth of Under Armour sneakers on the court or on the field, but there is a serious dearth of Under Armour sneakers everywhere else. Consequently, while Nike and Adidas are shifting to be lifestyle brands, Under Armour is the odd man out.

That is why teens are ditching the brand en masse, calling it yesterday’s favorite brand. That is why product popularity across the board is falling relative to Nike and Adidas. It’s also why sales growth at Under Armour has gone from being up 20%-plus a few quarters ago to down 5% last quarter.

None of that has changed over the past several weeks.

So, the only legitimate reason for a bounce in Under Armour stock is valuation, but at 73 times this year’s earnings, this isn’t a cheap stock.

All in all, this is clearly a sucker’s rally.

Analyst Downgrades Rain In

The sucker’s rally is already falling apart. Under Armour stock has fallen nearly 10% over the past 5 days.

The catalyst for the unwinding of the rally was a very shrewd downgrade from Susquehanna. Susquehanna pointed to poor production distribution as a big concern for the long-term stature of the Under Armour brand. They also said that poor production distribution will continue to keep gross margins low.

What does all that mean? Well, when growth started decelerating rapidly after the whole Stephen Curry-inspired bounce in 2015, Under Armour started looking for growth avenues to replace that lost momentum. They found that big growth avenue in discount retailers like Kohl’s Corporation (NYSE:KSS). Under Armour started selling product en masse to moderate price channels like Kohl’s. Doing that upset Under Armour’s higher-price customers like Dick’s Sporting Goods Inc (NYSE:DKS), which is actively decreasing the amount of Under Armour product in its stores.

That’s no good. What that means is Under Armour is selling more lower-margin product to Kohl’s and less higher-margin product to Dick’s. That is dilutive to the company’s overall margin profile. With earnings already in trough, further margin compression is really bad.

Bottom Line On Under Armour Stock

Whether its the fact that the valuation is still rich, that the margin compression narrative is worsening or that the brand is losing relevance to Nike and Adidas, there are multiple reasons not to like Under Armour stock here and now.

I remain bearish on this name. I wouldn’t be surprised to see this stock head back to the $10-12 range.

As of this writing, Luke Lango was long DKS and NKE.