In the Era of Colin Kaepernick, Wall Street Is Watching Celebrity Endorsements More Than Ever Before

The Golden State Warriors aren’t the only ones who stand to win when their star player Steph Curry sinks a slam dunk; it’s also a score for Under Armour, the brand that he has endorsed since 2013.

The basketball champion’s moves on and off the court are so closely intertwined with the label that on an earnings call in 2016, Under Armour CEO Kevin Plank joked to investors and analysts that he set the company’s financial targets based on Curry’s lucky number.

“When Stephen Curry decided to average 30 points this season to take the scoring title while wearing the number 30, we thought that putting up 30 percent growth on our end was the best way for us to demonstrate our pride and support of Stephen and the Warriors,” said Plank.

He went on to tout the success of the brand’s basketball sneaker category — the Curry One and Two in particular — and Wall Street responded in kind, boosting shares by more than 6 percent in that day’s trading. Several analysts cited Curry by name in their notes upgrading the company’s stock.

Stephen Curry
Stephen Curry

Under Armour has also experienced the flip side of the celebrity endorsement coin, however: After Plank called President Donald Trump “a real asset to this country” in a CNBC interview following the election, several of the biggest names attached to the brand denounced the comments, including Curry, Dwayne “The Rock” Johnson and Misty Copeland, and a Wall Street analyst cited “reputational risk” in downgrading the stock and advising investors to sell.

The relationships between publicly traded companies and their celebrity endorsers are being more closely watched than ever, said Janet Comenos, CEO and co-founder of Spotted, a research and analytics company. “With the rise of social media, every single move the celebrity makes is so highly scrutinized that it becomes a very interesting subject for Wall Street to cover, and if the celebrity has a major screwup, they’re more likely to mention it now because it can spread like wildfire,” she told FN.

Nike’s stock may have seen some volatility in the wake of the company’s campaign starring Colin Kaepernick, the former NFL quarterback who protested police brutality and racism by kneeling during the national anthem, polarizing the country. But more troubling, perhaps, are the rape allegations against Cristiano Ronaldo, the soccer star who’s signed to a $1 billion lifetime deal with the brand.

The former controversy, Nike no doubt anticipated; the latter, it couldn’t have. “We are deeply concerned by the disturbing allegations and will continue to closely monitor the situation,” the company said in a statement.

While all celebrities carry some risk, there can also be a significant upside for a brand that chooses the right one, particularly when it is struggling to connect with a particular demographic.

“Celebrity endorsement is probably the most scalable way that a brand that is dealing with an aging consumer base issue — like a Skechers or an Ugg, for example, where their consumers are getting older and the brand is losing relevance with the younger millennial consumers. An endorsement is a great way to reverse that fate,” said Comenos.

These brands, she said, are also the ones that are likely to tout their celebrity deals on earnings calls to reassure analysts and investors that they’re on a path to success, as Skechers did with its Camila Cabello partnership in the second quarter. When they do, then often, “Wall Street will take notice and will use the endorsement in their analysis of the stock,” said Comenos.

TOMS Sponsored By TOMS

Building Business to Improve Lives

TOMS discusses its approach to mental health awareness and female empowerment through impact initiatives in the footwear segment.
Learn More

Access exclusive content