While there’s plenty of anecdotal evidence that CEOs who praise Donald Trump can lose or gain a few customers, an analysts’ decision to downgrade Under Armour shares to “sell” has provided one of the clearest signs yet that they could be damaging their brand.
Under Armour CEO Kevin Plank last week described Trump as a “real asset for the country” while praising the president’s tendency to act, rather than think, just as his controversial travel ban was causing chaos at airports across the country.
Apart from sparking the requisite boycott campaign on Twitter, Plank’s comments drew stinging rebukes from some of the company’s own celebrity endorsers, including NBA player Stephen Curry and movie star Dwayne “The Rock” Johnson.
Curry said that he agreed with Plank’s description of Trump, if you removed the “et” from asset.
Sam Poser, an analyst at Susquehanna International Group, yesterday downgraded his recommendation on Under Armour shares to “negative” from “neutral” and slashed his price target to $14 a share from $24.
“We believe the decision to express a view in today’s highly charged political climate was a mistake,” Poser wrote in a note to clients. He added that the “polarized political climate and the pointed response by Stephen Curry make it nearly impossible to effectively build a cool urban lifestyle brand in the foreseeable future.”
To be sure, Poser said his decision was also partly based on other concerns, such as the company’s slowing growth. And his downgrade makes him one of the most bearish of many analysts who cover the stock. Morgan Stanley, for instance, this week upgraded its recommendation on the company to “equal-weight” from “underweight”.
Under Armour issued a statement shortly after Plank made his initial comments expressing opposition to the immigration ban. But in a sign it’s still worried about losing customers, Plank yesterday took out a full-page ad in the Baltimore Sun claiming his original choice of words about Trump “did not accurately reflect my intent.” A full copy of his ad can be viewed here.
Susquehanna’s Poser compared the situation to what happened to athletic apparel company Lululemon in 2013 after its founder Chip Wilson made insensitive comments about women’s bodies, driving a slump in sales growth.
Plank’s backtrack comes after Uber CEO Travis Kalanick quit Trump’s economic advisory council on the eve of its first meeting amid torrent of customer criticism. The ride-sharing app counts young Americans—who were far less likely to vote for Trump—as its largest customer segment.