The fashion industry is really struggling right now. The coronavirus pandemic is reducing the spending power of people. Since so many people are now without jobs, they have to focus on saving their money to buy essentials. Even the people who have jobs have become cautious about spending too much money. As a result, the fashion industry is one of the first to suffer. People no longer want to spend too much money on expensive brand goods.
Under Armour is one of the companies facing problems because of this. The company had problems even before the pandemic but now they have become much worse. The company’s revenue in Q1 of 2020 (January-March) was down by a lot. Under Armour has been struggling to capture a large enough market to sustain itself through difficult times.
Under Armour Stock Rises
On Monday, 18 May 2020, Under Armour saw its stock rise after many days of falling. The stock opened the day at 8.28 USD and did not fluctuate much during the day. The closing price of the stock was 8.23 USD. Compared to the previous close of 7.72 USD, this was a rise of 0.51 USD or 6.61%. This was slightly positive news for the company after months of bad news.
Why Did The Stock Rise?
There were two main reasons for the rise of the stock on the day. The first was the fact that Under Armour announced Mohamed El-Erian is the new independent lead director of Under Armour’s board. El-Erian was already a part of the board but now is the lead director. This is part of the company’s strategy to tackle its problems with the virus. Investors are looking for any signs that companies are trying to improve, and this change by Under Armour led investors to push the stock price up.
Another factor was that the overall market as a whole was on a rise on Monday, 18 May 2020. After Moderna Inc. gave positive news about a potential vaccine, optimism spread over the market and many stocks rose fast. Moderna’s own shares were up by almost 20% on the day. The wave of optimism certainly helped push Under Armour’s price up.
Is This A Trend Or Exception?
While Under Armour would certainly hope this a trend, that is not likely to be the case. Consumer spending patterns are changing fast, and Under Armour is likely to have an even worse Q2 in 2020 (April-June). The wave of optimism that is there in the market will dissipate soon, and the spotlight will return to the company’s poor sales. Hopefully, the company can continue to make changes and adjust to this pandemic.