What the Under Armour Inc. Stock Split Really Means

As of last Friday's close, shares of Under Armour Inc. (NYSE: UA  ) had risen nearly 17% year to date to just over $102 per share.

Some investors were understandably shocked, then, when they awoke Monday to see Under Armour trading right around $51 per share -- a seeming 50% drop! Of course, by now most have already realized this "plunge" wasn't the result of some terrible business development, but rather Under Armour's previously announced 2-for-1 stock split.

As the Fool's Steve Symington explains in the following video, investors need to remember that stock splits are a zero-sum game. In this case, while the price for each of Under Armour's shares was indeed cut in half, Under Armour simply doubled its shares outstanding to compensate by giving each investor one additional share for every share he or she already owned.

However, Steve also explains that there are a few notable reasons Under Armour wanted to perform this particular split. To learn what they are, check out Steve's full take in the following video.

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  • Report this Comment On May 15, 2014, at 6:05 PM, Hansen wrote:

    Under Armour’s stock is up over 20% from last month because it beat analysts expectation for the fourth quarter of fiscal year 2013 and the management’s upbeat guidance for fiscal year 2014

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Steve Symington

Technology and consumer goods specialist for the Fool. Steve looks for responsible businesses which positively shape our lives. Then, he invests accordingly. Enjoy his work? Connect with him on Twitter & Facebook so you don't miss a thing.

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8/28/2015 4:03 PM
UA $96.41 Up +0.72 +0.75%
Under Armour CAPS Rating: ****