Nike Stock Tanks Almost 20% To 4-Year Low: Why The Sneaker Giant's Struggling

Core Viewpoint - Nike's stock experienced a significant decline, marking its steepest single-day drop since 2001, driven by disappointing earnings and a bleak outlook for future sales [2]. Financial Performance - Nike's stock fell 19.2% by 11 a.m. EDT, reaching its lowest price since March 2020, and the second-worst day in its 44-year history as a public company [2]. - The company's quarterly sales ending May 31 showed a 2% decline, with a forecasted 10% year-over-year decline, significantly worse than the 3% drop expected by analysts [2][4]. - Nike is projected to report declines in revenue and profit for the fiscal year ending in May 2025, primarily due to a struggling business in China [4]. Market Context - The athletic apparel and sneaker industry has faced challenges, with competitors like Lululemon, Adidas, and Under Armour also experiencing stock declines [5]. - Nike's global search volumes have been consistently down year-over-year since July, with a 10% decrease last month, indicating a decline in consumer interest [5]. - The stock is trading at its lowest price-to-sales valuation since 2013, reflecting reduced investor confidence in Nike's growth potential [5]. Market Impact - Nike lost $27.5 billion in market value on the day of the stock drop, a significant amount compared to the market capitalizations of Adidas ($43 billion) and Lululemon ($38 billion) [6]. - Over the last three years, Nike's stock has decreased by 48%, underperforming the S&P 500's 34% return [7]. Analyst Insights - UBS analysts downgraded Nike's stock rating from buy to neutral, citing that fundamental trends are worse than previously realized and that a quick earnings rebound is unlikely [2]. - Evercore ISI analysts maintained a buy rating, suggesting that investors will need to be patient with Nike's turnaround story [8].