Today Nike is cool.
Under Armour is not...
The battle for cool has never been more intense in the athletic apparel space.
In Q3 of 2015 Under Armour was seen as the company that could take the "coolness" thrown from the incumbent, Nike. At the time Under Armour was growing revenue 30% year over year and the company was being valued north of $21B. That is the same value as Nike back in 2006. Since that time, Nike has seen its market value balloon to $133B or 7x its value 14 years ago. For Under Armour, however, its value has been cut by 60% in just 3 years.
Using hindsight, it is not easy to stay cool for a long time. It takes money, genius marketing, product execution, product innovation, and a slew of other key ingredients to long-term success. As we stand today, the valuation gap between Nike and Under Armour is at it widest mark on record. Will this gap close? I am not really one to predict this as it could happen in different ways, but for it to happen Under Armour will need to infuse itself with a lot more cool...
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*Our original piece was posted on SeeItMarket
Sean D. Emory
Avory & Co. Founder & Chief Investment Officer
Disclaimer: This is not a recommendation for purchase or sale of any securities. Avory is a not a shareholder of either company, but this can change at anytime.
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