What's going on?

It�s been a tough few days for Under Armour (UA). One of its biggest athletes, Jordan Spieth, blew his chance to win the Masters golf tournament on Sunday – ESPN called it �the most shocking moment in golf history.� And then on Monday, UA�s shares dropped 5% after a Wall Street analyst said the stock is significantly overvalued.

What does this mean?

The fear is that UA might have sold fewer clothes and shoes than expected in the first 3 months of this year � and for a lower �average selling price� (we�ll know more when it reports results on April 21st). Similar to Nike (which reported disappointing sales a few weeks ago), UA�s stock price is quite high relative to the profit that it makes. That�s because UA has consistently beat investors� expectations. The fear now is that its stock will fall sharply if it fails to do so this time.

Why should I care?

The bigger picture: Selling athletic gear has, arguably, become more competitive (oh, the irony�). Yes, it�s become appropriate to wear workout clothes to the bar and, on the whole, we are more active than previous generations. But more and more apparel makers have caught on to the trend. UA has been a big beneficiary of the shift to �active living� and is considered one of the market leaders � but it�s got a fight on its hands to stay in that position (avoiding quadruple bogeys would help…).

For you personally: Wait a minute� it looks like UA�s stock lost more than 50% of its value?! That�s because a �stock-split� occurred on Friday. Very simply, the number of outstanding UA shares doubled and the price of the stock halved. Therefore, it had zero impact on the value of the company (it�s like cutting a slice of pizza in half: you still have the same amount of pizza). Usually, a company will split its stock to make it easier for individual investors to buy it (i.e. to make it more affordable for people).