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Under Armour: Stock Getting "Blitzed" Over Super Bowl Ad?

Friday, 18 Jan 2008 | 11:18 AM ET
Under Armour
CNBC.com
Under Armour

Super Bowl ads this year are reportedly costing about $2.7 million for 30 seconds. That means that Under Armour's 60-second ad would cost approximately $5.4 million. (They definitely paid less than that for a first quarter ad, by the way.)

As of 9:30 am this morning however, that ad apparently has cost Under Armour $596 million. That's about $10 million a second, for those that are counting. Why? Because largely on news of this ad, the stock has plummeted from $42.08 at open yesterday to a $29.80 open today (last time it closed below 30 was March 15, 2006). So that's your $596 million loss, folks.

A Super Bowl ad must really have a negative connotation because there's not much more news on Under Armour to report that would cost this stock to go down so much. In fact, the company said yesterday that its 2007 will show net revenues up 40 percent to $605 million--better than its previous projection.

So the only thing I can think of is, the Street isn't pleased with this ad buy or doesn't like its growth projections of 20 to 25 percent. Well, it frankly doesn't seem that off to me.

Sure, Under Armour officials admitted that they'd be frontloading their advertising this year to help promote their cross trainer that comes out in May, but the ratio the company is spending on advertising (12-13 percent) will not change throughout the year and that type of spend is normal for this industry.

If you don't believe this company can make it in Europe, fine. If you don't believe this company's cross trainers will be successful, fine. But to penalize UA so much for a Super Bowl ad? It doesn't seem to make much sense to me.

Questions? Comments? SportsBiz@cnbc.com

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