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Super Bowl ads bad for stock price? I doubt it.

The SportsBiz blog on CNBC speculated that a 20% drop in the stock of sports apparel maker Under Armor was caused by the company's announcement that they will advertise on the Super Bowl. I know it has been a slow news year for Super Bowl advertising, but this blogger should stick to sports, and forget about the business...

We noted this news earlier today on our SuperBowlAdvertisers.com blog. Digging into it shows there is more to the story than the Super Bowl ad. The company announced 2007 results and discussed 2008 outlook in a press release yesterday. The main points are:

  • The company confirmed previously forecast overall revenue and profit growth for the year.
  • But the company announced front-loading the marketing expenses in the first half of the year to support the launch of their Performance Trainer shoes. The Super Bowl ad is one element of this acceleration of marketing expenses.
  • The Performance Trainer shoes hit the store in May, so sales of those shoes won't hit the books until H2.
  • Wachovia immediately downgraded the stock to "market perform" citing "...the slowdown at retail...and the uncertainty of launching the cross trainers" as reasons to "step to the sidelines on the stock."
  • CreditSuisse maintained their "outperform" rating, noting that "Marketing is a critical investment for any brand company..."

So the bean counters are nervous about the company spending a bunch of money now and promising future revenues from an unproven product in an uncertain economy. The Super Bowl is the least of the concerns.

Posted by Jim Nail on January 18, 2008 at 05:27 PM | Email this post Permalink
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