Under Armour is susceptible to fluctuations in consumer demand following turns in the economy. UA's sales may slide as the global recession continues to hurt retailers. Additionally, Maverick Capital, which owned over 7% of Under Armour, unloaded its entire position in November 2008 because of negative expectations. The company has cut its 2008 forecast to reflect the downturn in consumer spending and a sharp increase in cancellations.
At the end of October 2008, UA was trading at about 24 times its earnings which is nearly twice as high as the S&P 500 average. Furthermore, the company has lowered its 2008 revenue forecasts by $25 million, so its P/E ratio should be dropping, not rising.
Increased Competition. As Under Armour ventures into new product lines, the sleeping beasts of Nike and Adidas (and others) are not going to give up market share easily. With its competitors being much larger (Nike is 10x the size), Under Armour may have an uphill battle to gain market share in its new apparel and footwear markets. UA's entry into highly-competitive turf will undoubtedly energize these competitors and make further market share gains for Under Armour difficult.