Vonage Shorts Out Under Armour Has Lofty Ambitions
Below is a MRR and PLR article in category Finance -> subcategory Stock Market.
Vonage Struggles, Under Armour Aims High
Overview
This article discusses two recent IPOs: Under Armour and Vonage.Under Armour's Bold Ambitions
Under Armour, Inc. made its debut on November 18, 2005, at $31 per share. The company is rapidly gaining brand recognition with a strategy focused on appealing to young and athletic consumers, challenging the dominance of established leaders like Nike.
Under Armour is projected to have an impressive annual earnings growth of 22.5% over the next five years, compared to Nike's 14%. However, its valuation reflects high premium expectations. Under Armour trades at 46.19 times its FY07 earnings with a PEG ratio of 2.75, while Nike trades at 14.27 times earnings with a PEG of 1.06. This suggests that Under Armour must meet its ambitious targets to justify its premium valuation, or risk a sell-off, making Nike a more attractive value investment.
Vonage Faces Challenges
Vonage Holdings Corp. launched its IPO at $17, the midpoint of its anticipated range. As a pioneer in the VoIP (Voice over Internet Protocol) sector, Vonage boasts around 1.6 million subscribers but is yet to achieve profitability. VoIP technology uses broadband to facilitate phone calls, and while Vonage leads due to its early entry, it faces formidable challenges.
The company's heavy spending on customer acquisition negatively impacts its margins. As competition intensifies with major cable companies and eBay's Skype, Vonage contends with significant hurdles. Unlike its competitors, Vonage lacks an existing large customer base to tap into.
Prominent investors have criticized Vonage, with a well-known hedge fund manager and CNBC's Mad Money host labeling it as "a piece of junk." Currently trading at $13, the market sentiment suggests that Vonage may be seen as more hype than substance.
Conclusion
Under Armour and Vonage, while ambitious, must navigate distinct challenges to succeed in their respective markets.You can find the original non-AI version of this article here: Vonage Shorts Out Under Armour Has Lofty Ambitions.
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