One of the best quotes of 2017 has caught Under Armour Inc (UAA) in a social upheaval after superstar Steph Curry quipped that President Trump is an “asset to the country” but only if you remove the “et.” Zing.
The problem for Under Armour is that Steph’s one-liner was actually quite serious and came in response to the owner & CEO Kevin Plank’s public support for Trump, which he later backpedaled into support for Trump’s business policies as opposed to supporting for Trump’s social values or lack thereof. Plank’s sprint back on defense might come too little too late, as the opposition fast break is already at the rim, associating the brand with “racism, sexism, homophobia, and (let’s call it like it is) fascism” according to The Baltimore Sun.
As supporters of free speech, by the best definition we know—the xkcd version, of course—this dialog and voting with one’s wallet is a good thing. People should stand by their values and accept the consequences.
Let’s take a quick look at rough measurements of the social media impact:
While the match-up on the basketball court would truly be TREMENDOUSLY! One-sided and must-see TV, the Curry vs Donald breakdown on social media is roughly even. We’re comparing 3,800 tweets vs 10k+ points and 377 comments, so it’s a bit of an apples-to-an-orange comparison, but the balanced response may mean that this isn’t such a big deal after all. And we at Duke of Dollars would like to extend that “eh” analysis a bit further by looking out 10-20 years in the future. Will anyone remember this spat in 2035?
Keep in mind that investments should last at least 5 years and preferably 20+. Presidencies last 4 to 8 years on a traditional timeline, whereas corporations are theoretically forever. For a company growing its EPS at a double-digit clip (UAA), piles of cash have a way of soothing all ills. We’re not trying to downplay the social and political stakes but rather the impact on the company long-term. A few people on one side of the teeter-totter boycotting will be offset by a few people on the other end buying sneakers. If management has any sense, it’d keep mum on the topic, appease Curry without appearing to be spineless, and move on. The whole situation reminds us of how Geico’s mascot is an animated gecko and will only ever say what Geico wants it to say; now if only they figure out how to keep CEO’s so quiet!
Because that’s the risk of Under Armour, Inc and other brands these days with the political climate being so passionate and divisive. Choosing one side or the other might provoke a fervent response if the brand is considered too far out of touch with half its customers. Public statements by the founder/CEO of the business are subject to instant analysis. Unless Kevin Plank continues to put his foot in his mouth, the dust-up will be a non-event in the long run. Whether you’re long, short, or neutral UA/UAA – check your mid-cap and growth funds – the right move is exactly what you were doing prior to the story breaking.
Disclaimer: Long UA.