Why Is Under Armour Stock Rising Premarket?

Shares of the sportswear retailer have declined significantly in recent days, fueling speculation that management might be considering taking the company private.

Investors seemed to be in the mood for a relief rally for Under Armour (UAA) after the sportswear retailer's shares suffered wide losses over the last week.

UAA shares were up nearly 2% in premarket trading on Tuesday, with the retail sentiment holding firm in the 'extremely bullish' zone on Stocktwits.

On Friday, Under Armour said its sales decline would worsen in the current quarter, due to soft demand, and flagged $100 million in tariff-related costs for the year.

The outlook, which came alongside an inline 4% decline in first-quarter revenue, pushed shares 18% lower to a nearly all-time low. 

They fell another 5.9% on Monday, as analysts, including Bank of America and Citi, painted a gloomy picture of the company's prospects and trimmed their price targets on the stock.

A Stocktwits user noted that the new members appointed to the Under Armour's board in April have strong financial backgrounds, suggesting that the company may be considering a private transaction.

Under Armour's merchandise has been losing appeal in recent years due to increased competition and partly because its products are perceived as being slightly more expensive than those of rivals, such as Nike (NKE).

Last year, the brand brought back its founder, Kevin Plank, as CEO and announced a major restructuring plan that includes narrowing its product selection to focus on premium products and men's offerings.

Under Armour shares are down 33.4% year-to-date.

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