Under Armour Plunges 20% Amid Tariff Storm—Can This Retailer Survive the Perfect Storm of Demand and Trade?

Summary
• Under Armour (UAA) tumbles 19.95% to $5.315, its lowest since 2020
• Q1 loss of $2.6M vs. $10.8M expected, with full-year profit projected to halve
• CEO cites 'tariff environment' and 'sluggish demand' as existential threats

Under Armour’s stock imploded on Friday, trading 20% below its previous close amid a Q1 earnings disaster and dire profit warnings. The selloff, fueled by Trump-era tariffs and weak consumer demand, has erased over a third of its value this year. With intraday swings from $5.645 to $5.12, the stock now trades near its 52-week low of $4.78, raising urgent questions about its survival strategy.

Tariffs, Weak Demand, and a Broken Turnaround Plan
Under Armour’s collapse stems from a Q1 loss of $2.6M—far below the $600K profit forecast—and a revised full-year guidance projecting a 50% drop in profitability. CEO David Bergman blamed 'tariff environment' and 'sluggish demand for athletic apparel,' particularly shoes, for the downturn. The company’s attempt to mitigate costs via supplier diversification and price hikes won’t materialize until FY2026, leaving investors with a 'get worse before they get better' narrative. With $8.6M in adjusted income on $1.1B revenue, the stock’s 20% plunge reflects a loss of confidence in its ability to navigate trade wars and shifting consumer preferences.

Apparel Sector Mixed as Nike Trails Under Armour’s Freefall
The Apparel, Accessories, and Luxury Goods sector saw mixed performance, with Nike (NKE) down 0.46% despite Under Armour’s steeper 20% drop. While tariffs and demand weakness affect the sector broadly, Under Armour’s lack of pricing power and reliance on U.S. markets amplify its vulnerability. Sector peers like Ralph Lauren and Prada are leveraging omnichannel strategies and premium positioning to buffer trade impacts, contrasting Under Armour’s cost-cutting focus.

Bearish Playbook: Puts and Short-Term ETFs in a Volatile Climate
• MACD: -0.0472 (bearish divergence from signal line 0.0063)
• RSI: 44.5 (oversold territory but no immediate reversal signal)
• Bollinger Bands: Price at $5.315 (below middle band $6.8985)
• 200-day MA: $7.45 (price 29% below key support)

Under Armour’s technicals paint a grim picture: a short-term bearish trend confirmed by the engulfing candlestick pattern and a long-term range-bound profile. Key support levels at $6.82–6.84 (30D) and $6.67–6.79 (200D) are now distant targets. The 20% drop has pushed RSI into oversold territory, but without a clear catalyst for a rebound, the bias remains bearish. No leveraged ETF data is available, but short-term puts offer asymmetric risk/reward.

Top Option 1: UAA20250919P5 (Put, Strike $5, Expiry 2025-09-19)
• IV: 52.19% (mid-range volatility)
• Leverage Ratio: 28.53% (high gearing)
• Delta: -0.285 (moderate sensitivity to price moves)
• Theta: -0.0021 (slow time decay)
• Gamma: 0.3497 (responsive to price swings)
• Turnover: 22,189 (liquid)
• Price Change Ratio: +280% (volatility-driven rally)
This put thrives in a 5% downside scenario (projected price $5.05), yielding a payoff of $0.95 per share. Its high leverage and gamma make it ideal for a sharp drop, while the 52% IV reflects market anticipation of further volatility.

Top Option 2: UAA20250919P6 (Put, Strike $6, Expiry 2025-09-19)
• IV: 56.74% (elevated but not extreme)
• Leverage Ratio: 7.04% (moderate gearing)
• Delta: -0.655 (high sensitivity to price moves)
• Theta: -0.0003 (minimal time decay)
• Gamma: 0.349 (strong responsiveness)
• Turnover: 18,695 (liquid)
• Price Change Ratio: +208% (volatility-driven rally)
With a strike price above current levels, this put benefits from a 5% drop to $5.05, offering a $0.95 payoff. Its -0.655 delta ensures significant gains if the stock breaks below $6, while the 56% IV suggests ample room for further downside.

Hook: Aggressive bears should target UAA20250919P5 for a 280% move if $5.05 breaks; UAA20250919P6 offers a safer play with 208% potential if $6 holds as support.

Backtest Under Armour Stock Performance
The backtest of UAA's performance after a -20% intraday plunge shows mixed results. While the stock recovered slightly over the short term, the overall performance remained muted, with the 3-Day win rate at 52.79%, the 10-Day win rate at 51.92%, and the 30-Day win rate at 51.05%. The maximum return during the backtest period was 1.49%, which occurred on day 40, indicating that while there was some recovery, it was not substantial.

UAA at Crossroads: Watch $5.05 Breakdown or Sector Rally to $6.67
Under Armour’s 20% collapse has pushed it to the brink, with technicals and fundamentals aligned for further downside. The 52-week low of $4.78 looms as a critical test, while the sector’s mixed performance—led by Nike’s -0.46%—suggests broader risks. Investors should monitor $5.05 as a key inflection point: a break below triggers a 280% move in the UAA20250919P5 put. Conversely, a rebound above $6.67 (200D support) could signal a short-covering rally. For now, the bearish playbook dominates, but patience is key in a market where volatility is the only certainty.