Under Armour's (NYSE:UAA) (NYSE:UA) poor performance in the recent quarter shows that its business is not going to recover to its pre-pandemic levels anytime soon. The company still hasn’t finished its reorganization, which started in 2018, while its long-term shareholders have been losing money for years. Despite the fact that its stock has been growing in recent months on bullish market sentiment, we believe that due to its weak fundamentals, the momentum will not hold for long. As the management expects the company’s operating loss for the year to range from $800 million to $860 million, we continue to believe that it’s better to avoid Under Armour stock, especially at the current price.

Momentum Will Not Hold for Long

Under Armour’s stock has appreciated by more than 50% since our latest article on the company was published in early August. Despite such growth, we still believe that Under Armour is uninvestable at this stage. The problem of Under Armour is that its founder and the current executive chairman Kevin Plank still has significant control over the company since he holds over 60% of the company’s voting rights. As a result, average investors have no say in which direction the company needs to go. Considering that in the last five years Under Armour’s stock lost more than 60% of its value and it still hasn’t recovered to its pre-pandemic levels, it’s safe to say that Kevin Plank’s business decisions so far failed to create significant value to the average shareholders. In addition, the ongoing SEC investigation along with the underperformance of Under Armour’s digital business and the drop of the company’s revenues in its core markets are signalling that the current momentum will not hold for long. If the market enters a correction in the following months, then it’s safe to assume that Under Armour’s stock will also depreciate.

READ FULL ARTICLE HERE