NIKE Inc. or Nike is an American multinational company specializing in sportswear and footwear.
The company designs, develops, markets and sells athletic footwear, apparel, accessories, equipment and services.
The company was founded by William Jay Bowerman and Philip H. Knight more than 40 years ago, on January 25, 1964, and is headquartered in Beaverton, Oregon.
As of July 15, 2024, NIKE (NKE) shares were down more than 33 percent in 2024, making them a Top 5 Underperformer among all the S&P500 components.
Perhaps everything would have been "normal", and everything could be explained by the one only unsuccessful December quarter of 2023, when the Company’s revenue decreased by 2 percentage points to $12.6 billion, which turned out to be lower than analyst estimates.
But one circumstance makes everything like a "not just cuz".
This is all because among the Top Five S&P500 Outsiders, in addition to NIKE, we have also shares of another large shoe manufacturer - lululemon athletica (LULU), that losing over 44 percent in 2024.
Influence of macroeconomic factors
👉 The economic downturn hurts most merchandise retailers, but footwear companies face the greatest risk to loose profits, as higher fixed costs lead to larger profit declines when sales come under pressure.
👉 The Nasdaq US Benchmark Footwear Index has fallen more than 23 percent since the start of 2024 as consumer spending is threatened by continued rising home prices, banks' reluctance to lend, high lending rates, and high energy and energy costs. food products - weaken.
👉 In general, the above-mentioned Footwear Sub-Industry Index continues to decline for the 3rd year in a row, being at levels half as low as the maximum values of the fourth quarter of 2021.
Investment Domes worsen forecasts...
👉 In the first quarter of 2024, Goldman Sachs made adjustments to its forecast for Nike shares, lowering the target price to $120 from the previous $135, while maintaining a Buy recommendation. The company analyst cited ongoing challenges in Nike's near-term growth trajectory as the main reason for the adjustment, anticipating potential underperformance compared to market peers, noting that Nike's 2025 growth expectations have become "more conservative."
👉 Last Friday, Jefferies Financial Group cut its price target from $90.00 to $80.00, according to a report.
👉 Several other equity analysts also weighed in on NKE earlier in Q2 2024. In a research note on Friday, June 28, Barclays downgraded NIKE from an "overweight" rating to an "equal weight" rating and lowered their price target for the company from $109.00 to $80.00.
👉 BMO Capital Markets lowered their price target on NIKE from $118.00 to $100.00 and set an overweight rating on the stock in a research report on Friday, June 28th.
👉 Morgan Stanley reaffirmed an equal-weight rating and set a $79.00 price target (up from $114.00) on shares of NIKE in a research report on Friday, June 28th.
👉 Oppenheimer reiterated an outperform rating and set a $120.00 price target on shares of NIKE in a research report on Friday, June 28th.
👉 Finally, StockNews.com downgraded NIKE from a "buy" rating to a "hold" rating in a research report on Friday, June 21st.
...and it becomes a self-fulfilling prophecy
Perhaps everything would have been fine, and all the deterioration in forecasts could have been attributed to the stretching spring of price decline, if not for one circumstance - it is not the ratings that are declining due to the decline in share prices, but the shares themselves are being pushed lower and lower, as one after another depressing ones are released analytical forecasts from investment houses.
16 years ago. How it was
On January 15, 2008, shares of many shoe companies, including Nike Inc. (NKE) and Foot Locker Inc. (FL) fell after investment giant Goldman Sachs (GS) slashed its stock price targets, warning that the U.S. recession would drag down the companies' sales in 2008 as consumers spend more cautiously. "The recession will further increase the impact of the key headwind of a limited number of key commodity trends needed to fuel consumer interest in the sector," Goldman Sachs said in a note to clients.
In early 2008, Goldman downgraded athletic shoe retailer Foot Locker to "sell" from "neutral" and cut its six-month share price target from $17 to $10, saying it expected U.S. sales margins to continue to decline in 2008 despite store closures.
The downgrade was a major blow to Foot Locker, which by early 2008 had already seen its shares fall 60 percent over the previous 12 months as it struggled with declining sales due to declining demand for athletic shoes at the mall and a lack of exciting fashion trends in the market. sports shoes.
Like now, at those times Goldman retained its recommendation rating to “buy” Nike Inc shares, based on general ideas about the Company’s increasing weight over the US market, topped off with theses about the Company’s international visibility, as well as robust demand ahead of the Beijing Olympics.
However Goldman lowered its target price for the shares from $73 to $67 ( from $18.25 to $16.75, meaning two 2:1 splits in Nike stock in December 2012 and December 2015).
Although Nike, at the time of the downturn in forecasts, in fact remained largely unscathed by the decline in demand for athletic footwear among US mall retailers, it reported strong second-quarter results in December 2007 (and even beating forecasts for strong demand for its footwear in the US and growth abroad) , Goldman Sachs' forecasts for Nike's revenue and earnings per share to decline were justified.
Later Nike' shares lost about 45 percent from their 2008 peaks, and 12 months later reached a low in the first quarter of 2009 near the $40 mark ($10 per share, taking into account two stock splits).
The decline in Foot Locker shares from the 2008 peaks 2009 lows was even about 80 percent, against the backdrop of the global recession and the banking crisis of 2007-09.
Will history repeat itself this time..!? Who knows..
However, the main technical graph says, everything is moving (yet) in this direction.
The company designs, develops, markets and sells athletic footwear, apparel, accessories, equipment and services.
The company was founded by William Jay Bowerman and Philip H. Knight more than 40 years ago, on January 25, 1964, and is headquartered in Beaverton, Oregon.
As of July 15, 2024, NIKE (NKE) shares were down more than 33 percent in 2024, making them a Top 5 Underperformer among all the S&P500 components.
Perhaps everything would have been "normal", and everything could be explained by the one only unsuccessful December quarter of 2023, when the Company’s revenue decreased by 2 percentage points to $12.6 billion, which turned out to be lower than analyst estimates.
But one circumstance makes everything like a "not just cuz".
This is all because among the Top Five S&P500 Outsiders, in addition to NIKE, we have also shares of another large shoe manufacturer - lululemon athletica (LULU), that losing over 44 percent in 2024.
Influence of macroeconomic factors
👉 The economic downturn hurts most merchandise retailers, but footwear companies face the greatest risk to loose profits, as higher fixed costs lead to larger profit declines when sales come under pressure.
👉 The Nasdaq US Benchmark Footwear Index has fallen more than 23 percent since the start of 2024 as consumer spending is threatened by continued rising home prices, banks' reluctance to lend, high lending rates, and high energy and energy costs. food products - weaken.
👉 In general, the above-mentioned Footwear Sub-Industry Index continues to decline for the 3rd year in a row, being at levels half as low as the maximum values of the fourth quarter of 2021.
Investment Domes worsen forecasts...
👉 In the first quarter of 2024, Goldman Sachs made adjustments to its forecast for Nike shares, lowering the target price to $120 from the previous $135, while maintaining a Buy recommendation. The company analyst cited ongoing challenges in Nike's near-term growth trajectory as the main reason for the adjustment, anticipating potential underperformance compared to market peers, noting that Nike's 2025 growth expectations have become "more conservative."
👉 Last Friday, Jefferies Financial Group cut its price target from $90.00 to $80.00, according to a report.
👉 Several other equity analysts also weighed in on NKE earlier in Q2 2024. In a research note on Friday, June 28, Barclays downgraded NIKE from an "overweight" rating to an "equal weight" rating and lowered their price target for the company from $109.00 to $80.00.
👉 BMO Capital Markets lowered their price target on NIKE from $118.00 to $100.00 and set an overweight rating on the stock in a research report on Friday, June 28th.
👉 Morgan Stanley reaffirmed an equal-weight rating and set a $79.00 price target (up from $114.00) on shares of NIKE in a research report on Friday, June 28th.
👉 Oppenheimer reiterated an outperform rating and set a $120.00 price target on shares of NIKE in a research report on Friday, June 28th.
👉 Finally, StockNews.com downgraded NIKE from a "buy" rating to a "hold" rating in a research report on Friday, June 21st.
...and it becomes a self-fulfilling prophecy
Perhaps everything would have been fine, and all the deterioration in forecasts could have been attributed to the stretching spring of price decline, if not for one circumstance - it is not the ratings that are declining due to the decline in share prices, but the shares themselves are being pushed lower and lower, as one after another depressing ones are released analytical forecasts from investment houses.
16 years ago. How it was
On January 15, 2008, shares of many shoe companies, including Nike Inc. (NKE) and Foot Locker Inc. (FL) fell after investment giant Goldman Sachs (GS) slashed its stock price targets, warning that the U.S. recession would drag down the companies' sales in 2008 as consumers spend more cautiously. "The recession will further increase the impact of the key headwind of a limited number of key commodity trends needed to fuel consumer interest in the sector," Goldman Sachs said in a note to clients.
In early 2008, Goldman downgraded athletic shoe retailer Foot Locker to "sell" from "neutral" and cut its six-month share price target from $17 to $10, saying it expected U.S. sales margins to continue to decline in 2008 despite store closures.
The downgrade was a major blow to Foot Locker, which by early 2008 had already seen its shares fall 60 percent over the previous 12 months as it struggled with declining sales due to declining demand for athletic shoes at the mall and a lack of exciting fashion trends in the market. sports shoes.
Like now, at those times Goldman retained its recommendation rating to “buy” Nike Inc shares, based on general ideas about the Company’s increasing weight over the US market, topped off with theses about the Company’s international visibility, as well as robust demand ahead of the Beijing Olympics.
However Goldman lowered its target price for the shares from $73 to $67 ( from $18.25 to $16.75, meaning two 2:1 splits in Nike stock in December 2012 and December 2015).
Although Nike, at the time of the downturn in forecasts, in fact remained largely unscathed by the decline in demand for athletic footwear among US mall retailers, it reported strong second-quarter results in December 2007 (and even beating forecasts for strong demand for its footwear in the US and growth abroad) , Goldman Sachs' forecasts for Nike's revenue and earnings per share to decline were justified.
Later Nike' shares lost about 45 percent from their 2008 peaks, and 12 months later reached a low in the first quarter of 2009 near the $40 mark ($10 per share, taking into account two stock splits).
The decline in Foot Locker shares from the 2008 peaks 2009 lows was even about 80 percent, against the backdrop of the global recession and the banking crisis of 2007-09.
Will history repeat itself this time..!? Who knows..
However, the main technical graph says, everything is moving (yet) in this direction.
Trade active
March 21, 2025Nike's stock (NKE) has experienced significant declines over the past five years, with shares falling to Zero watermark (erasing all previous positive returns to "Zero" 5-years cold rock bottom) compared to the S&P 500's 145% 5-years gain.
This underperformance stems from multiple interrelated challenges:
1. Consistent Sales Declines and Guidance Reductions
- 2024 Warning. Nike shocked investors in the middle of 2024 (when we published this idea) with a forecast for 10% quarterly sales decline in early 2025 – triple analysts' expectations. Full-year FY2025 guidance projected mid-single-digit sales drops versus anticipated 1% growth.
- 2025 Tariff Impact. By March 2025, CFO Matt Friend warned of 400-500 basis point gross margin compression due to new 20% tariffs on Chinese imports, projecting Q4 2025 sales to fall mid-teens percentages.
- China Struggles. Sales in Greater China plummeted 17% YoY in Q3 2025, continuing a multiyear decline where Chinese revenue fell 10% below 2021 peaks.
2. Operational Missteps
- Digital Strategy Overextension. Overcommitment to direct-to-consumer channels damaged retailer relationships, while Nike Digital revenue declined.
- Inventory Mismanagement. Excess stocks of stale styles like Air Force 1 forced aggressive discounting, contributing to gross margin declines from 45.4% (Q1 2025) to 41.5% (Q3 2025).
- Innovation Lag. Competitors like Hoka and On gained market share with technical innovations, while Nike's product development cycle slowed. Global Google searches for Nike products fell 10% YoY.
3. External Economic Pressures
- Tariff Headwinds. $2.7B in new tariffs on Chinese/Mexican imports directly impacted production costs.
- Consumer Weakness. CFO Friend cited "macro factors on consumer confidence" as drags, particularly in China where disposable income growth slowed.
- Currency Volatility. FX fluctuations created $100M+ revenue headwinds in recent quarters.
4. Leadership Transition Risks
- CEO Changes. Return of CEO Elliott Hill in October 2024 brought strategic shifts, including renewed wholesale partnerships and accelerated launches like Pegasus Premium sneakers. However, analysts remain skeptical about execution timelines.
- Cost-Cutting Focus. A 22B restructuring plan including 1,600 layoffs failed to offset revenue declines, with FY2025 operating margin guidance cut to 10% from 13.5%.
5. Market Dynamics
- Valuation Compression. Nike's price/sales ratio hit decade lows at 2.3x, reflecting lost premium positioning.
- Analyst Sentiment. Multiple downgrades occurred, including Citi slashing target price from $102 to $72. UBS highlighted "fundamental trends worse than understood".
- Competitor Gains. Adidas capitalized with retro sneakers and 30% stock growth in 2024, while Lululemon and On eroded Nike's athleisure dominance.
Recovery Efforts and Challenges
Recent initiatives show glimmers of hope – new CEO Hill mended retailer relationships, holiday 2024 discounts cleared old inventory, and the Vomero 18 launch showed early promise.
However, the company faces a multi-quarter turnaround; analysts project sales declines through at least Q1 2026. With tariffs adding $500M+ annual costs and China's recovery uncertain, Nike must balance margin protection with crucial innovation investments to regain market leadership.
Technical breakdown
Following mentioned above fundamental observations, we at our 💖Super-Duper Beloved PandorraResearch Team remain Bearishly tuned, meaning also technical and price acrion perspectives as they drawn on the chart.
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Best 'No more American Gloss' wishes,
PandorraResearch Team 😎
Note
April 3, 2025👉 Nike stock has turned down to $60 per share, the lowest mark since Covid19 pandemic, since Trump announced reciprocal tariffs of 46% on Vietnam, 32% on Indonesia and 34% on China.
👉 Suppliers in Vietnam, Indonesia and China make 95% of the sneaker company's manufactured goods.
Like most U.S. footwear brands, Nike has long relied on Asia factories to produce its products. Nike had shifted away from China as its main manufacturing partner to countries like Vietnam and Indonesia.
👉 Shares of Skechers, Deckers, Crocs also fell on the news.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.