EXEC: Amer Sports Earns Upgrade as Tibet Fireworks Backlash Seen as ‘Short-Lived’

Amer Sports, Inc. received a stock upgrade from Wells Fargo, as the investment firm’s checks in China found that the recent social media backlash stemming from the company’s recent marketing campaign, featuring a fireworks display in Tibet, “point to little-to-no concern” in both the near- and long-term.

Wells Fargo lifted its rating on Amer to “Overweight” from Equal-Weight” and its price target to $40 from $35.

Arc’teryx, on September 19, staged a marketing campaign featuring a fireworks display in the Himalayan region of Tibet, drawing fierce social media uproar in China over its potential environmental damage and perceived disrespect for local culture. Critics accused Arc’teryx of hypocrisy for acting against its environmentally aware image and called for boycotts.

China has been a significant driver of Arc’teryx’s recent sales surge, with the country accounting for approximately 40 percent of the brand’s sales.

Ike Boruchow, Wells Fargo’s lead analyst in the space, wrote that feedback from channel checks with Chinese sportswear and footwear sources, as well as checks on social media discussion in China, “suggests the initial response was loud/broad…but like the fireworks, short-lived.”

Boruchow added, “Most notably, our checks cited no change in demand trends in China the week following the event, while expectations from partners are that the issue will ‘quickly fade.’ Also, on Weibo, we can see trends over the last 7 days show a drop in discussion and interaction back to baseline levels.”

The analyst suspects that Amer’s close relationship with Chinese sportswear giant Anta Sports, Amer’s largest shareholder, helped control the fallout.

Boruchow said Anta is China’s Olympics outfitter and has “close ties” with Chinese authorities. Sources told Wells Fargo’s team that any major government investigation that was threatened “would have happened by now.”

Boruchow concluded, “We believe this helps Arc recover from the situation quickly. Our checks suggest that even in the ‘medium term,’ any 3Q impact should be made up in 4Q. Essentially, our checks suggest that any impact should already have been felt, which is not the case (listen to Lt. Frank Drebin – “nothing to see here folks”).”

Following the uproar, Arc’teryx said the campaign was meant to promote its commitment to nature while noting that the display “utilized biodegradable, environmentally friendly materials, that all stock herds had been relocated, and wildlife had been coaxed away with salt bricks.” The company also stated that the project “had passed tests in line with those set by the 2022 Beijing Winter Olympics and adhered to pollution management standards equivalent to those in Japan and Europe.”

Arc’teryx nonetheless apologized and said it was taking steps to “mitigate the environmental and social impacts” of the event and establish procedures to ensure a similar incident wouldn’t happen again. The brand said in a statement, “This event was in direct opposition to our commitment to outdoor spaces, who we are, and who we want to be for our people and our community. We are deeply disappointed that this happened, and apologize, full stop.”

Boruchow noted that just before the fireworks display occurred, Amer raised its financial guidance for the third quarter of 2025 on September 18, due to continued momentum at Arc’Teryx and Salomon. He stated, “Momentum at both Arc and Salomon remains industry leading, and AS continues to carry the strongest growth profile in our entire universe.”

Third-quarter earnings are now expected to grow in the high 20s percent, compared to the previous guidance of approximately 20 percent growth. Adjusted operating margin is projected to be at or above the high end of the previous guidance range of 12 percent to 13 percent.

Amer also reiterated its top-line growth projections over the next five years.

The update was made ahead of an Investor Day planned for September 18 at Arc’teryx’s headquarters in Vancouver, BC. At the venue, Arc’teryx’s management team outlined a plan to expand the outdoor brand to $5 billion by 2030, up from just over $2 billion in 2024.

Finally, Boruchow said the recent pressure on Amer’s stock price tied to the fireworks debacle presents a buying opportunity. Boruchow wrote, “Given our renewed optimism on both Arc and Salomon in their key China region, we raise our target multiple to 40x and take advantage of the recent pull-back in shares to become more constructive.”

On September 22, on the first day of trading after the fireworks presentation went viral, shares of Amer slid $2.18 to $35.27 and lost another $0.99 the following day. On Monday, September 29, Amer closed at up $0.13 to $34.61.

Shares are still up for the year, having started 2025 at $27.96. Shares went public at $13.40 in February 2024.

Image courtesy RadII