Why did TeamViewer stock plunge after announcing Manchester United deal?

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Manchester United finally announced a new sponsor last week after nearly two years of looking for a Chevrolet replacement.

Tech firm TeamViewer will be the club’s shirt sponsor from 2021/22 in a five year deal.

This is a deal United were very pleased with, securing £47 million per season during the pandemic, while also leaving room for a separate automobile sponsor.

Chevrolet, who paid £64m per year across seven seasons, were both the main sponsor and the automobile sponsor.

Even if the additional sponsor does not quite add up to £64m, United have still done well to secure the deal from TeamViewer, given the state of the global economy.

It’s still higher than the pre-pandemic deal Spurs struck with AIA worth £40m per season, for instance.

So why then did TeamViewer’s stock take a dramatic plunge after the positive news was announced on Friday?

Stock market concerns

After the announcement, TeamViewer’s stock dropped by 16 per cent.

Bloomberg described this as a ‘slump’ and explained there were concerns about the hidden costs TeamViewer would incur as part of the deal.

The concern came from investors around a huge upturn in marketing expenses on TeamViewer’s behalf.

The firm are expecting this will be a worthwhile investment, to be associated with one of the biggest clubs in world football.

The share price is still low and has not recovered. This may be a good time for buyers to invest, but it’s probably not what the company had in mind when the announcement was made.

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