Billionaire Investor Bill Ackman Continues to Buy This Stock While It's Down Over 50%. Should You Buy Before It Roars Back?

Core Viewpoint - Nike is showing signs of recovery after a significant decline, with billionaire investor Bill Ackman increasing his stake in the company, indicating potential investor confidence [1][2][6]. Group 1: Company Performance - Nike has experienced a decline of over 50% in its peak value since late 2021, with a recent 8% year-over-year sales drop and a 10% decline in gross profit for the quarter ending November 30, 2024 [1][5]. - The company has shifted its strategy from direct-to-consumer sales back to engaging with retail partners, which had previously been abandoned [4][5]. - Nike's price-to-sales (P/S) ratio is currently at 2.3, the lowest in a decade, suggesting that the market may be overreacting to its recent struggles [12]. Group 2: Strategic Changes - Nike has appointed former executive Elliott Hill as CEO to guide the company back to success after a period of strategic missteps [5]. - The company is implementing price cuts to clear stale inventory and is refreshing its product pipeline [5]. - Nike has launched a new partnership with SKIMS, a rapidly growing shapewear brand co-founded by Kim Kardashian, which could enhance its market position [8][9]. Group 3: Market Position and Future Prospects - Despite recent challenges, Nike remains the largest sneaker and sports apparel company globally, with a strong balance sheet showing $9.7 billion in cash against$9 billion in debt [13]. - The collaboration with SKIMS is seen as a potential game-changer, with the first product line set to debut in spring, although it may take time to assess its impact on Nike's long-term prospects [10][14]. - Historically, Nike has averaged a P/S ratio of 3.6 over the past decade, indicating significant upside potential if the company can successfully navigate its current challenges [14].