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Companies Investing in Pickleball Find Wall Street Success

by Jason Flamm on

Pickleball pros and paddle brands aren't the only ones benefitting financially from pickleball's growing popularity.

Investors are, too.

Amer Sports, Inc. (AS), a Finnish sportswear company renowned for brands like Wilson tennis rackets and pickleball equipment, saw heightened investor interest upon its debut on the New York Stock Exchange (NYSE) on February 1st of this year.

This attention stemmed from the booming popularity of pickleball, which continues its run as the fastest-growing sport in the U.S. for the third consecutive year.

Participation in pickleball surged from 4.8 million players in 2022 to 8.9 million in 2023, with forecasts indicating it could exceed 20 million in the current year. Amer Sports’ Wilson brand capitalized on this trend by offering pickleball-specific gear, including paddles, athletic wear, bags, and shoes.

While Amer Sports' stock initially opened at $13.40 per share, it shot up 36 percent to $18.23 on March 4. However, it has since retreated by approximately 15 percent following its first earnings report as a public company.

The IPO for Amer Sports priced its shares at $13.00 each, raising $1.37 billion and valuing the company at $6.3 billion. This valuation fell short of management's expected initial range of $16 to $18 per share, which would have valued Amer Sports at up to $8.7 billion. Despite missing this mark, the IPO surpassed the $5.2 billion Anta Sports spent on its Amer Sports acquisition in 2019.

Amer Sports' significant reliance on China presents a notable concern for investors. The company's key suppliers and manufacturing hubs are located in China, leading to apprehensions about escalating trade tensions that could result in future tariffs or restrictions on its ability to market goods produced or sourced from China in the United States. 

Despite these concerns, the company's fourth-quarter results did not meet investor expectations, leading to a more than 5 percent drop in the stock following the report's release.

However, despite the stock's recent decline, Wall Street analysts have a positive sentiment regarding Amer Sports' future prospects. Analysts see the current downturn in the stock as a potential buying opportunity, suggesting that now could be a favorable time to purchase shares at a discounted price. This optimistic outlook may stem from the company's strong position in the sports and outdoor industry and its strategic initiatives to capitalize on emerging trends such as the growing popularity of pickleball.

Now, excuse me while I try to remember my online brokerage account password.

This content is intended for informational purposes only. Please seek professional advice before acting on it.

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