Four charts that prove Under Armour CEO Kevin Plank has no idea what he’s talking about

Kevin Plank is a successful businessman with strong opinions. The data, though, suggests he places ideology above facts.

Under Armour CEO Kevin Plank

Under Armour CEO Kevin Plank

If you’re a huge sports merchandise brand, you never want your marquee superstar endorser going after you in the press. But that’s what happened this week when Under Armour CEO Kevin Plank told CNBC that “[t]o have such a pro-business president is something that is a real asset for the country.”

The aforementioned marquee superstar, 2014-15 NBA champion and reigning MVP Steph Curry of the Golden State Warriors, took a shot:

“I agree with that description, if you remove the ‘et.'”

The two have now apparently gotten on the same page after some top-speed backpedaling by Plank, who has taken great pains to clarify that he only meant his praise in a strictly business sense. It’s fun when CEOs get hauled out to the woodshed.

The problem is that even the business-specific comment illustrates what a fact-resistant barking fucktrumpet Plank is. History shows pretty conclusively that business does better under Democratic administrations. Donald himself said so in 2004:

“I’ve been around for a long time and it just seems that the economy does better under the Democrats than the Republicans.”

You’d think a big-time CEO could read a chart, but apparently Plank can’t. For instance, how about this one, which shows Under Armour’s stock performance from the time Barack Obama was inaugurated up until Q4 of 2015.

Under Armour stock price

That’s a climb from around $5 to roughly $100 per share.

Of course, then this happened:

Under Armour stock price

I did some snooping and it looks like growth was slowing down, which scared investors, and a recent Quartz analysis suggested that the company needs to understand how much its success hinges on design and style – something it has heretofore not understood.

I then turned to my colleague Otherwise, who knows a great deal more than I do about business. His initial reaction: “my guess would be the stock was overvalued in the first place. Trendy stock, bunch of amateurs in Peoria buy it, like Amazon and Google bubbles.” After a little more study, he came back with this: “Quick read, the assholes put in place an ownership structure which effectively changed their governance so that our boy Kevin can do whatever in the fuck he wants. Pro investors really, really don’t like that.”

Otherwise hasn’t studied the case in depth and this isn’t my area of expertise at all, so who knows. Doesn’t really matter, anyway. The important part is that first chart, which shows UA, dramatically overburdened by a socialist president who just hates business, quintupling their stock price.

After that? Well, here’s the Dow Jones performance vs. Under Armour over the same period. The Dow is the blue line and UAA is the green.

Dow vs Under Armour

Let’s look at one more chart. This the Down (blue) and Under Armour (green) since Donald’s inauguration.

Dow vs UAA

I know this is an awfully small sample and I don’t want to draw any conclusions on limited data, but, you know, just saying. The evidence we have suggests that absolutely, Plank could benefit from a business-friendly president.

Maybe the better question, though, is whether Under Armour could benefit from a better CEO.

16 replies »

  1. It’s debatable whether a great CEO can influence a stock’s price upwards (at least in the short term,) but there’s no doubt a fool can tank it. Fun piece.

  2. So in 1996 a 23 year old starts a business in his grandmother’s basement. 21 years later it’s a 3.8 billion dollar enterprise with 11,000 employees and the founder at age 44 still owns the majority of the voting shares and maintains complete control of day to day operations. I see a business genius, you see a fucktrumpet. I wonder which of us is right?

    Let’s look at the financials over time. There are 3 tabs in the link below showing P&L, Balance, and Cash Flow over the last 5 years. They’re all important but the Profit and Loss Sheet is always my first go to if I’m trying to judge a company’s viability. I see steady growth and great margins, Tell me what you see that points to anything other than a well run profitable organization.

    Now the charts that prove Plank is a bumbling idiot. Did you think about overlaying them with the timing of Under Armour’s _multiple_ stock splits (2012, 2014, 2016)? The details get complicated but the basic idea is simple. Double the shares, halve the unit value. Overall value remains exactly the same. Raw data without context is worse than meaningless, it’s misleading.

    I find much to admire in Mr Plank and as a fellow (albeit infinitely smaller) businessman I share his bullish views on the change of guard and an upcoming more pro-business environment. That’s just a feeling, only time will make it or break it as a fact.

    • This is all well and good, but you’re aggressively sidestepping the point. Per CNBC: “During the eight years of President Obama, the Dow jumped 150 percent, or 12.3 percent annually, through Tuesday, according to Bespoke Investment Group. That’s the third-best stock market performance since WWII for any president behind only President Clinton’s and FDR’s triples.”

      During this time – at least, up until they drove off a cliff in late 2015 – UAA was performing remarkably well. Growing like gangbusters. So obviously they were doing something right.

      From this data, an objective observer would have a hard time painting Obama as somebody who was hating on business. Plank, though, celebrates the fact that FINALLY we have a pro-biz president.

      He isn’t the only guy out there who’s placing ideology above facts, of course. My point clearly isn’t that the company didn’t accomplish what it accomplished – I mean, I’m the one providing that first chart. My point is about a man making a patently stupid comment. He ought to know better.

    • Frank–valid points, sorta, but big drop in 2015 wasn’t a split, it was a governance issue. And I thought all you right wingers were efficient market guys. If you believe in market efficiency, then Merton, Fama and Miller say that the stock price should incorporate all historical data (including profit and loss) as well as future expectations. So the drop in stock price reflects the wisdom of crowds about the future P&L. (And you know full well that P&L is only one of three important statements, and one increasingly being criticized by professional investors for its limitations.) I could go on, but the line between “good for business and therefore good for society” and “good for business at the expense of society” is not a clear one. As a good Univ of Chicago guy, I believe the former to a point, but don’t take it as immutable Randian truth like Republicans do. As you say though, time will tell, although I’d think Trump’s hypocrisy(“drain the swamp” and the DeVos scandal, repair Obamacare vs. repeal, one China, etc, etc) would be starting to worry you a bit. Trump will be a good test of many things–words vs. actions, ideology vs. competence, and ability of those on the right to learn from experience. (We never had dinner when I was in CO last year. Will be in Leadville for summer)

  3. I assumed your premise was the subject line Sam. A reasonable assumption given that the overwhelming majority of your 575 words and 4 charts were spent defending that premise. This is your place not mine and I try to follow the defined rules here. Number one of which I understand to be, “stay on topic.” I spent my 256 words doing exactly that.

    If your point was that business does better under democrats then you should stated that in the title and provided proof more substantial than a link to a Salon article and “Donald Trump said so.” Any credible analysis (and there are many) of economic performance under different administrations begins with “GDP does seem to do better under democrats but that difference is almost within the margin of statistical error” and ends with huge caveats about external events and overlapping effects of previous administrations.

    Mr Plank and I both feel quite strongly that our businesses are likely to do better under Trump than Clinton. You feel that’s ignorant. Otherwise told me I was a fucking idiot for voting for Trump. I thought about that for a moment but then I realized I’ve got 37 years in the hot seat fighting tooth and nail every day trying to provide for myself and my employees. When my gut tells me something’s right that’s what I listen to and I’m sure that’s what Mr Plank listens to as well.

    • I’m sure by now you understand that a point can’t always be made in 150 characters. I cannot imagine for a second that there was anything remotely ambiguous about my point for those who read it all, and I know you did. But to restate, Plank isn’t an idiot because he hasn’t made money. He’s an idiot because he felt it necessary to suggest that Obama was bad for business. Ideology trumps facts.

      If he believes Trump would be better for biz than Clinton – an assumption I’m going to need proven to me, but that’s what he thinks, so fine – then that’s what he should say. What he DID was simply indefensible according to the data.

  4. Otherwise, I’m still pissed at you for trying to bite my head off a few months ago but I’ll get over it. Life is too short to spend it angry and I do (mostly) enjoy your acidic musings.

    I believe you have it half right about Under Armour’s performance in 2015. Plank was definitely consolidating his control over the voting shares which was expensive and not particularly to investor’s liking. What you missed was both the half billion dollar purchase of MyFitnessPal and the bankruptcy of one of UA’s major retail outlets Sports Authority.

    The retail landscape for sporting goods (and most consumer goods) is changing from brick and mortar to web and Plank took a big gamble adjusting to it. Judging by UA’s 2016 performance it is paying off.

    Have fun in Leadville, you’ll be driving by our largest customer Climax Mine as you crest Fremont Pass on the way there.

    • I’m not a finance guy, so could you explain your comment about “Judging by UA’s 2016 performance it is paying off” for me? This is the chart for 1-1-16 to present and while I know stock price isn’t the only metric, this doesn’t tell an especially encouraging tale.

    • Don’t remember that. At any rate, “tried?” No one ever accused me of trying to bite someone’s head off. My skills have eroded.

      I won’t offer a defense, but I will say this has been a frustrating election for me. My candidate won by 3 million votes and didn’t get in, and now I’m having to put up with muscle-bound morons screaming at me that I’m “liberal trash.” So I’m not the calm, Zen-like figure I normally am.

      I know that mine well. At least from the vantage point of riding a bicycle past it a few times.

  5. I’ll give you some data on my 2 businesses employing 10 people Sam. Very particular data with the proviso that 80% of our sales are to the extractive industries of mining and oil patch.

    We came into 2009 with combined yearly gross sales around $3.5 mil. That rose slightly during Obama’s first term to $4 mil. Sales started free falling in 2012 and now stand at about $2 mil. That’s not a recession for us, it’s a depression.

    Fortuitously I’ve been stashing cash for years in anticipation of exactly this downturn and have made it a policy that we all receive a living base wage with excellent benefits but anything beyond that is paid in bonuses. Average employee wage and benefits have fallen approximately 50% from $160k to about $80k. If sales do not improve, further cuts will occur. Funny thing though, oil patch is already slowly firing back up and I’m seeing fragile but tell tale signs of the same in mining.

    So, do you think I cheered when the college professor and his family took that last helicopter ride? Fuck an a tweety I cheered!

    • Okay, but I’m not seeing anything causal in here, or systemic. Not sure I see how that’s Obama’s fault, nor do I get how it explains your comment about UAA performance.

    • Well, I didn’t really call you a fucking idiot. If I thought you were a fucking idiot I wouldn’t argue with you. There are many people who had logical reasons to vote for Trump that aren’t stupid, it’s just those reasons are unsavory. Far more common are people who think they have logical reasons when in fact they made an unseemly emotional decision and have sub-consciously constructed a logical facade that helps them sleep knowing they’re risking the republic.

      The argument that you feel business will be better is fine and is your right. It’s your argument that’s shaky, both the bad financial analysis (Sam’s wasn’t much better, btw) and using your business as a proof point.

      Your business suffered because the price of oil fell precipitously. If your business does better, than means the price of foreign oil is up, which is indeed good for you but historically has been bad for every-non-oilfield business in America, although it’s less true than it used to be. It’s certainly not valid to make inferences about the overall American business climate based on the performance of a single, small US oilfield services company. Personally, I’d love for the price of oil to go up–my son and brother work in the oilfield and as an ecologist, I’m just fine with $110/bbl oil.

      You do indeed play by the rules and that’s why I respect you enough to engage. Your right to your opinion is unimpeachable, but like most Trump supporters, the logic for how you got there is downright patchy. Having said that, you may be right, no one can ever predict markets.

  6. I’m not a finance guy either Sam, but I do know a little about corporate structure and governance. My comment on UA’s 2016 performance is based on what they sold and the margins they sold it at and nothing to do with stock price. They made money in 2016, good money. Sales are up, profits are up, see my original Market Watch link.

    Kevin Plank is operating effectively as sole proprietor and I believe he has shown a willingness to take a short term hit in market price while he consolidates control and looks to the future profitability of the company he founded. I find that to be very refreshing. The boards of so many Fortune 500 companies do the opposite in milking short term gains for shareholders while totally disregarding the future.

    You’ve seen it, you’ve been fucked by it. “Lets make one guy do the work of five, think how much money we’ll save for our bonuses and golden parachutes!” Cutting fat is smart, cutting meat down to the bone is destructive but that’s the game a lot of these Wharton whiz kids play. Very shortsighted in my opinion.

    • I generally hate the fuck out of UA because of his work to get Maryland out of the ACC – hardly the best reason, but there it is – but I always try to account for the basic well being of employees. If they tank, it puts good people on the street and I’m always against that.

      I still think my point holds – there’s no data suggesting that FINALLY we have a good pres for biz makes sense, and I’ll be eager to see if Trump is as good as you think he’ll be for the economy or if he’ll be the dumpster fire I suspect. This is a case where, as bad as I hate the bastard, it would be good if I were wrong.

    • btw, the drop in stock price is ok because it was because of an acquisition? that’s even worse. it means the acquisition in question was 100% dilutive, in other words Plank gave away half the capital in his company. and “take a short term hit in market price while he consolidates control….” he consolidated control by changing the rules. the right way to consolidate control is to own a majority of the stock. he rigged it so he has control without ownership–as a business owner, you think that’s a good thing? Sheesh.