Earnings Disappointment Sends Nike Stock Below Key Support. Should You Buy the Dip?

Core Viewpoint - Nike's shares dropped over 10% following the release of Q2 financials that exceeded market expectations, but the company provided disappointing future guidance, projecting a low single-digit percentage decline in sales and a gross margin decrease of about 200 basis points for the fiscal third quarter [1] Group 1: Financial Performance - Nike's revenue in Greater China, a key market, fell by 17% in the recent quarter, raising concerns about the effectiveness of CEO Elliott Hill's turnaround plan [2] - Despite the decline, Nike's gross margins, excluding tariff impacts, showed a year-over-year increase in Q2, indicating potential long-term earnings power [4] Group 2: Market Sentiment and Analyst Opinions - The post-earnings decline pushed Nike's stock below its 50-day moving average, a technical indicator often seen as bearish [3] - Analyst Kevin McCarthy expressed a positive outlook on Nike, suggesting it could be an "alpha generative investment" over the next couple of years and highlighted the company's improved U.S. inventory management [4][5] - Wall Street remains generally optimistic about Nike's stock for the upcoming year, indicating confidence in the company's recovery strategy [6]