The footwear and apparel designer saw its stock price crater in February, tumbling by over 20% in a single day. And since then, the shares have continued their downward trajectory, falling by almost 50% in the last seven months.

What happened? And could there be the possibility of a rebound that investors can capitalise on?

Investigating the problem

At first glance, it’s not immediately obvious why this S&P 500 business suddenly turned south in winter. Its quarterly results posted fairly strong earnings with both revenue and net income climbing by 17%. Yet what seems to have spooked investors is Deckers’ guidance. Or rather, the lack of it.

Management issued a warning that growing macroeconomic and trade uncertainty was making it difficult to project performance going into its 2026 fiscal year (ending in March). And the small insight that was provided for the following quarter pointed to a concerning slowdown for some of its flagship brands.

Skip ahead a few months, and the entire apparel sector got hit with a wave of selling activity as US tariffs threatened higher import costs as well as pressure on discretionary consumer spending. Subsequently, Nike and Adidas also saw their market-caps shrink as investor sentiment soured. And with these headaches still persisting today, the Deckers share price has struggled to recover.

A hidden opportunity?

The sharp drop in share price has dragged Deckers Outdoor’s forward price-to-earnings ratio down to 18. While that’s not cheap by UK standards, it’s pretty reasonable versus some of the valuations in the US market today. And with the impact of tariffs now baked into the stock, could now be a good time to buy?

Despite the external challenges, Deckers still has some desirable traits. It’s Hoka and UGG brands remain popular with customers that have continued to deliver double-digit growth in spite of headwinds. And with management expanding its direct-to-consumer sales channel, the company’s steadily unlocking higher-margin growth versus its traditional wholesaler approach to doing business.

The balance sheet also appears to be in tip-top shape with no debt in sight and $1.7bn of cash & equivalents. And management’s begun using this spare liquidity to buy back its own stock at the current discounted price.

That certainly signals confidence in the long run once the economic landscape eventually improves. And it’s why I think investors may want to give this S&P 500 stock a closer look.

The post Down 45% in 2025! What’s going on with the share price of this S&P 500 icon? appeared first on The Twelfth Magpie.

Shares in Dr. Martens (LSE:DOCS) have fallen 79% since it initially appeared on the stock market in 2021. And it’s reached the point the possibility of a takeover looks increasingly plausible.

Speculation?

The idea of Dr. Martens being acquired isn’t just speculation. Earlier this week, the stock jumped as one of its major shareholders pushed for a strategic review considering the possibility of a takeover.

Mario Cibelli – managing member of Marathon Partners Equity Management – said the company being public isn’t in the best interests of shareholders. Instead, management should pursue a sale.

According to Cibelli, the business could be sold for around $2bn to someone able to streamline and improve its operations. That’s 70% higher than the company’s current market value.

That’s an attractive return for investors. But while I’ve been buying Dr. Martens shares for my portfolio, it’s not because I think there’s an opportunity to sell them on to someone at a higher price.

An undervalued stock

Cibelli stated that the company’s share price doesn’t accurately reflect the intrinsic value of the underlying business. And I agree with this, but that makes me want to buy it, not sell it. 

I therefore don’t want the company taken private or sold to a larger competitor. I’d rather keep adding to my own stake in the business while I think the shares are a bargain.

It’s definitely true that Dr. Martens has been facing a difficult trading environment and has made this worse with mistakes of its own. So there’s clear risk with owning the stock going forward.

As I see it, though, there’s a chance to buy a stock that trades at a bargain price right now. So I’d rather take advantage myself than offer it out to someone else.

Who would buy it?

If management does decide to look for a buyer, I don’t think it would be short of options. One that stands out to me as a potential candidate is Deckers Outdoor (NYSE:DECK). 

Deckers owns running shoe brand Hoka and has a boot brand of its own in Ugg. I can see Dr. Martens fitting nicely alongside these as part of its lineup.

Furthermore, the company has done very well lately. At a time when rivals have been struggling with a difficult macroeconomic situation, the business has kept sales growing impressively.

I think Deckers probably has the capacity to fix what ails Dr. Martens. And with its own stock trading at a price-to-earnings (P/E) ratio of 32, the might even be an arbitrage opportunity.

A stock to consider buying

I’ve been buying shares in Dr. Martens for my portfolio and I intend to continue doing so. That’s because I think it’s good value, though, not because I think a takeover might be on the cards.

I’d rather the company didn’t get taken private – while it would likely boost the share price, finding undervalued stocks is hard enough as it is. But if it happens, there won’t be much I can do about it!

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