What the Under Armour Inc. Stock Split Really Means

Under Armour just completed its latest 2-for-1 split. Here's why, and what it means for investors.

Steve Symington
Steve Symington
Apr 17, 2014 at 9:18AM
Consumer Goods

As of last Friday's close, shares of Under ArmourĀ Inc. (NYSE:UAA) 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 givingĀ 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.