When it came to sports in 2016, there was plenty to talk about. LeBron brought a title to Cleveland, Villanova won the national championship on a buzzer beater, the Chicago Cubs broke their curse, and SO MUCH MORE.
But that didn’t necessarily mean good things for business, apparently. Out of the 33 publicly-traded sports companies on Wall Street, Nike, Under Armour and Manchester United were the worst performing stocks in 2016.
Looking at each of these companies, the result appears shocking at first glance. Under Armour has deals with MVPs such as Bryce Harper, Stephen Curry and Cam Newton. But Forbes could point out the reasoning behind the fall for the athletic brand.
The company had 26 straight quarters of at least 20% sales growth, but the stock fell 14% on Oct. 25 after warning that growth would slow in the coming years. Profit margins are also expected to be hit by increasing levels of investment. The company is still targeting sales of $7.5 billion in 2018, compared to $4.7 billion for the latest 12 months.
According to leading stock trading apps, UA’s stock is off 40% since a new class of share began trading in March. Even with the big stock decline, Under Armour still trades at 39 times trailing earnings compared to 25 for the S&P 500.
Manchester United has a little more logic to it. The team finished fifth in the Premier League and didn’t make the Champions League. That caused its stock to drop 19 percent.
As for Nike, there doesn’t appear to be a clear explanation. The brand still has an artillery of top-ended athletes representing it. However, the company’s stock was down 18 percent in 2016.
These companies will all look to bounce back in 2017. Other than Manchester United, it’s hard to know what Nike and Under Armour could do better. We just might be seeing their values drop naturally. As for Manchester United, a few more wins might help.
[Forbes]
