Shine Is Off Under Armour Following Spieth's Epic Collapse At The Masters

Under Armour Inc.

shares are trading lower by $2 at $41.55 in Monday's session. The catalyst for the decline is the epic collapse of Jordan Spieth on the back nine of 2016 Masters. Obviously, Spieth donning the Under Armour attire on national and international television has investors exiting the issue in Monday's action. After taking a seemingly insurmountable five stroke lead into the back nine, Spieth saw his five stroke lead disintegrate into a three shot deficit over the next three holes. He did attempt to recover, but was unable to overtake Danny Willet who was sitting comfortably in the clubhouse at 5 under par not long after the Spieth's meltdown. Another contributing factor to the decline was the advances the issue made on Wednesday through Friday as investors anticipated a Spieth victory which was reinforced as he was perched at the top of the leaderboard going into the weekend. Throw in a 2 for 1 stock, which on many occasions exerts some downward selling pressure on an issue and the reason for today's decline is even more apparent. According to Dennis Dick of Benzinga's Premarket Prep Show, "statistically speaking stocks tend to run up prior the split (which may help explain some of the trading action from Tuesday through Thursday) but show short-term weakness after they split", which is contrary to the trading action in Friday's session as the issue added $0.55. Dick, who noticed relative weakness in the issue during premarket trading despite the strong tape despite a modest buy imbalance was alerted to the potential weakness in the issue during Monday's Premarket Show, due to Spieth's collapse. As a result, he was able to execute a short at the opening print and was able to cover a substantial profit within minutes of his execution. Here is the interaction that took place on Monday's show around 8:30 AM as the opening imbalances were revealed. Under Armour ended Tuesday's session at $41.77 added $1.15 on Wednesday, paused on Thursday and added another $0.55 on Friday as Spieth seemed poised to be the first back to back winner of the Masters since Tiger Woods in 2001 and 2002. Perhaps investors were looking to replicate the profits reaped when the same strategy was employed in 2015. Over the same time period preceding and during the early rounds of the 2015 Masters (Tuesday-Friday), Under Armour rallied from a pre-split $80.84 to $83.75. On top of those gains, the issue traded as high as $85.94 on Monday (after Spieth secured the victory) and fell back to close at $85.11. Just imagine those investors salivating as Spieth teed off on the back nine with a five stroke lead while calculating their exit point for Monday's session. Also, those investors would have benefitted from a strong early tape off the open that may added to the buying momentum in the issue. Interestingly, if one of these aforementioned investors had exited near the open, as some did and many more wish they had, they still would have been to exit the trade at a profit depending on the their entry. Despite a buy imbalance of 33,000 shares, Under Armour opened $0.18 lower into a strong market. It could only manage a $0.11 bounce, not even reaching Friday's close ($43.54), stalling at $43.47. As the market continued higher off the open, Under Armour was besieged with sellers. In fact, in the first 25 minutes of the session, there never more than a quarter bounce as the issue plummeted from until it finally bottomed over $2 lower at $41.34. As it turns out, that puts all the buyers after Tuesday's close in the red. Since making the low, it rebounded into the mid $42 handle, but now is struggling to remain there, with much of the action taking place in the area of last Tuesday's close ($41.77). Of course other market dynamics may account for trading action in the shares of Under Armour in Monday's session. However, when taking into the account Monday;s trading action in the issue during as well as after last year's Masters, investors should be altered to potential impact of a sponsored star athletes performance in high-profile events can have on the sponsoring company, good or bad.