Brendan Coffey
4 min read
Sports stocks posted their first positive month since January as fears eased about tariffs, which had dragged the Sportico Sports Stock Index 23% lower from its mid-February peak to its late April lows.
The benchmark sports index posted a 7% gain in May to close the month at 1,380, pushing the index back into positive territory for 2025. The strength in sports reflected the wider rebound seen in the broader markets, which saw action in the month dominated by knee-jerk reactions to Trump tariff announcements followed by sharp rebound days due what investors began calling the TACO trade.
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“The recent rally has a lot to do with markets realizing that the U.S. administration does not have a very high tolerance for market and economic pressure, and will be quick to back off when tariffs cause pain. This is the Taco theory: Trump Always Chickens Out,” wrote Financial Times columnist Robert Armstrong in May, popularizing an acronym that began with Wall Street traders.
The buying-on-weakness TACO trade resulted in three trading sessions in May when the Sportico Sports Stock Index jumped at least 2%. That’s unusually volatile in the history of the index, but actually calmer than April, which had four such up days and five days of outsized losses.
Given the tariff obsession of the markets, it’s no surprise that one of the sports stocks most potentially impacted by the Trump tariffs was the lead gainer in May. Amer Sports (AS) leapt 50% in the month as management told investors the worst-case scenario of Trump’s 145% import tax on Chinese made goods would clip five cents a share from earnings in 2025. Since at the time of Amer’s earnings announcement last week Trump’s had already backed off the 145% rate, shares rallied under the realization the profit hit would be far less for the year.
Amer, which has 11 sporting goods brands including Arc’teryx, Salomon and Wilson, estimates perhaps 10% of its worldwide revenue would be subject to any U.S. taxes on Chinese goods, given its ability to source goods from other, less-taxed countries and the fact most of its sales come from Asia and Europe.
Other tariff-exposed components of the Sportico index also rallied in the month. Sneaker maker On Holdings (ONON) gained 24%; concession firm Aramark (ARMK), which expected some hit on its concessions supplies like drinking cups, rallied 22%; while Asia-dependent gear markers Under Armour (UAA, up 17%) and Nike (NKE, up 7%) also rose. All told, 28 of the Sportico Sport Stock Index components rose in May, 13 of those more than 10%.
