Topline
Shares of Nike nosedived Friday, setting multiple dubious milestones as the sneaker and athletic wear company faces investor dissatisfaction.
A Nike store in Shanghai.
NurPhoto via Getty Images
Key Facts
Nike’s stock was down 20% by close, notching the worst day in its 44-year history as a publicly traded company.
The plummet sent Nike’s share price to its lowest price since March 2020; other than that month, when the global stock market briefly crashed due to COVID-19 lockdowns, it’s Nike’s lowest price since January 2019.
Precipitating the decline was Nike’s Thursday afternoon earnings report which disclosed a 2% decline in its quarterly sales ending May 31 and a warning that the company expects a 10% year-over-year decline, far worse than the 3% drop indicated by consensus analyst estimates.
Nike’s “fundamental trends are much worse than we realized” and “there will be no quick rebound for Nike’s earnings,” UBS analysts led by Jay Sole wrote to clients Friday, downgrading their rating for Nike’s stock from a buy to neutral.
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Why Is Nike Stock Down?
Nike is expected to report year-over-year declines in revenue and profit in its fiscal year ending in May 2025, with much of the damage stemming from its slumping China business, which analysts project to come in 10% below 2021’s record.
It’s broadly been a bad stretch for athletic clothing and sneaker companies—shares of Lululemon (stock down 17% over last three years), Adidas (down 26%) and Under Armour (down 68%)—and for multinational companies with a high proportion of sales in China (see Apple). Nike has also dealt with an apparent decline in interest in its products—its global search volumes have been down year-over-year constantly dating back to last July, and were down about 10% last month, according to Goldman Sachs research. “Rising competition” in the athletic apparel and footwear space “doesn’t help” either, noted Jefferies analysts led by Randal Konik, naming newer entrants like Alo and Hoka as threats to Nike’s market dominance. Nike stock is trading at its lowest price-to-sales valuation since 2013, indicating diminishing investor confidence in the Oregon-based firm’s ability to grow its profits.
Big Number
$27.5 billion. That’s how much market value Nike lost Friday. That’s a massive chunk of the total market capitalization of the next-largest athletic wear companies, Adidas ($43 billion valuation) and Lululemon ($38 billion).
Surprising Fact
Nike stock is down 48% over the last three years, including dividends, far worse than the S&P 500’s 34% return.
Crucial Quote
“Investors will have to be patient with the turnaround story,” wrote Evercore ISI analysts led by Michael Binetti, maintaining their buy rating for the company.
Forbes Valuation
Nike cofounder Phil Knight’s net worth fell by $5.5 billion Friday, falling by more than any other billionaire, according to our real-time tracker. The 86-year-old Knight and his son Travis Knight own about 3% of Nike’s shares, according to FactSet.
