Kevin Durant recently spoke negatively about Under Armour (UAA - Free Report) , and shares of the struggling sports apparel retailer dipped about 2.5% on Tuesday, leaving some investors to wonder whether there is a connection between the NBA superstar’s comments and the latest dip in UAA’s stock price.
The Golden State Warriors’ forward took to the podcast airwaves for a two-part question and answer session on The Bill Simmons Podcast, which is part of sports and pop-culture website The Ringer. During the interview, Durant touched on an array of topics, but one was very relevant in the world of sports financials.
Simmons asked Durant why Maryland colleges are unable to recruit top local basketball players. And the reigning NBA Finals MVP didn’t mince words with his response.
“I think a lot of kids, to be honest, they don’t choose Maryland unless they play in like an Under Armour system coming up,” Durant told Simmons. “Shoe companies have a real big influence on where these kids go. Nobody wants to play in Under Armours, I’m sorry. The top kids don’t because they all play Nike.”
Durant, who grew up in Maryland, was brutally honest. In his opinion, most top young basketball players don’t play in Under Armour gear, and many prefer Nike.
But Durant is a Nike athlete. He has his own expensive KD signature shoes, of which Nike is currently selling the tenth generation. More than that, Durant signed a 10-year, $300 million deal with Nike in 2014.
He is playing the role of a company man, a company Durant most likely truly values and believes in. Nonetheless, Nike pays Durant more per year than the Golden State Warriors do, so it isn’t hard to see why he backs his brand and disparages its competitors.
Let’s not forget that Durant’s MVP teammate Stephen Curry is the face of Under Armour’s basketball leg, if not the whole company. And the two stars are at least cordial enough to share the basketball and the spotlight.
Durant’s shoes might help Nike stock, especially heading into the upcoming basketball season. But his comments against Under Armour should hardly have swayed Under Armour investors.
The Maryland-based company has taken far greater hits based on real economic and retail realities this year. In fact, Under Armour stock hit a new 52-week low on Tuesday.
Yet, Under Armour’s fall is more likely to do with Finish Line’s (FINL) massive one-day collapse than one of Maryland’s most famous sons’ off the cuff remarks (also read: Finish Line (FINL) Stock Tanks, Sports Industry Follows).
Industry trends, not generalizations about what basketball shoes young players think are cool, determine stock prices. On the same day that Durant’s comments made their rounds on the internet, Nike’s (NKE - Free Report) stock dropped by 1.86%. Shares of Adidas AG (ADDYY - Free Report) also fell by 1.13%.
Zacks' 10-Minute Stock-Picking Secret
Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.
But here's something even more remarkable: You can master this proven system without going to a single class or seminar. And then you can apply it to your portfolio in as little as 10 minutes a month. Learn the secret >>