Are Shorts Right To Attack Under Armour's Stock?

Under Armour Inc (NYSE: UA) is one of the most heavily shorted stock in the S&P 500. According to Bloomberg's Tara Lachapelle, short interest in the athletic apparel maker's name actually doubled in the second.

More than 33 percent of Under Armour's shares outstanding are sold short, compared to just 1 percent for its biggest rival — Nike Inc (NYSE: NKE).

Lachapelle suggested that shorts are now attracted in Under Armour after successfully riding out the steady decline in GameStop Corp. (NYSE: GME)'s stock, which has lost more than half of its value since late 2013. In fact, shares of the video game retailer is nearly flat from where it was five years ago.

Under Armour's prospects were diminished when one of its largest clients, Sports Authority, filed for bankruptcy protection in March. Accordingly, Under Armour slashed its operating income and expects to earn at most $445 million, down from a prior forecast of $507 million.

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Even though the market had plenty of time to react to Sports Authority's bankruptcy announcement, short sellers continue to believe Under Armour's stock could further drop.

"Will Under Armour run with the bulls or get clawed by the bears?" Lachapelle asked. "Despite slowing growth and recent setbacks, short-sellers may have been too hasty with this one."

At time of writing, Under Armour was up 0.53 percent on the day, trading at $40.35.