Short Sellers Pile Into Under Armour As Growth Slows

Under Armour Inc UAA UA is getting hammered by more than 25 percent in early Tuesday trading after the company’s Q4 earnings report missed the mark.

Under Armour broke a streak of 26 consecutive quarters of at least 20 percent year-over-year revenue growth in Q4 when it reported growth of only 12 percent during the critical holiday shopping season. The market is understandably concerned that Under Armour’s growth may be peaking.

The company’s 2017 guidance also fell well short of consensus expectations. Under Armour is forecasting $5.4 billion in 2017 revenue, roughly 10.8 percent below consensus estimates.

The Wall Street Journal’s Steve Russolillo pointed out that there may be more behind Under Armour’s big drop than disappointed shareholders. On Twitter, Russolillo noted that Under Armour is currently the most heavily-shorted stock in the entire S&P 500 in terms of short percent of float. According to Russolillo, Under Armour’s current short percent of shares outstanding is 22 percent.

Shortsqueeze.com reports that Under Armour currently has more than 41.1 million shares held short with 14.0 days to cover. Those numbers will likely get a big boost as short sellers pile into the stock following the big earnings miss.

The possible silver lining for Under Armour bulls is that all the stock may have some explosive short squeeze potential at some point down the line if the Q4 report was more of an outlier than a signal of a longer-term slowdown.

Under Armour shares are now down 46.8 percent in the past six months.

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