Why Under Armour Is Selling MyFitnessPal for $130 Million Less Than It Paid

Under Armour is selling MyFitnessPal for less than it paid for in 2015. An analyst at BMO Capital Markets says the company is turning inward and focusing on its core strength.

The company (ticker: UAA) said Friday that it struck a $345 million deal with private-equity firm Francisco Partners for the app. MyFitnessPal, which includes exercise and nutrition tracking features, has 200 million users. Under Armour acquired MyFitnessPal back in 2015 for $475 million.

“As part of our ongoing transformation, we are committed to actively managing our business to ensure that our strategies and assets are prioritized to connect even more deeply with our target consumer – the Focused Performer,” Under Armour CEO Patrik Frisk said in a news release.

Frisk said divesting MyFitnessPal reduces complexity for consumers interacting with the Under Armour brand, “by empowering sharper alignment with our long-term digital strategy.” He said it also gives the company more flexibility to invest toward driving long-term returns and value for shareholders

The company will continue to operate the separate MapMyFitness platform, which includes MapMyRun and MapMyRide. Under Armour said MapMyFitness will continue to be a “crucial element of Under Armour’s digital strategy, as does its connected footwear business.”

The connected fitness segment, which includes MyFitnessPal and MapMyFitness, drove $37 million of the company’s $1.43 billion sales during the third quarter. The company bought MapMyFitness in 2013 for $150 million.

Connected fitness has been a hot trend in recent months. Apple launched its own Fitness+ service for $9.99 a month in September, which is comparable to Peloton Interactive’s $12.99-per-month app. Peloton shares have soared 290% in 2020, as the pandemic closed gyms and pushed consumers to its at-home equipment and services.

BMO Capital Markets analyst Simeon Siegel wrote in a note on Friday that he suggested in July that “turning inward to focus on its core strength would help [Under Armour] re-elevate its profit profile.”

Siegel noted the company’s third-quarter sales were better than Wall Street expected. The stock was up 1.1% to $13.94 while the S&P 500 index was down 2.1%.

Siegel has a Market Perform rating on the stock with a $13 price target.

“Clearly there remains heavy lifting ahead and channel mix matters, but we believe 3Q showed compelling progress,” Siegel wrote.

Source: Barron’s