NKE

One of the most known producers of athletic footwear, apparel and sport equipment in the world dropped its market value to the lowest level since the first coronavirus month of 2020. During the last trading session of June, Nike's share price got the most crushing one-day blow in over two decades. Much worse is that the stock may hardly succeed in clinging on a ledge of rock where the first stop on the way down happened. Nike may show even more weakness, and so we feel more reasonable to think more on the idea of selling possible upticks at $85 or $90 (if there would be any attempts to get there) than a hypothetical plan of purchasing Nike considering lower levels in between of $55 and $65.

Despite Nike's adjusted earnings release at $1.01 per share for the second quarter, which was nominally 20% above average estimates of the Wall Street's pool of analysts at $0.83, the outlook for the rest of the year looked grimy. The lack of demand because of the rising competition from new footwear brands like Deckers' Hoka, New Balance and on led Nike losing its market share. The company's management projected sales to drop by 10% during the current quarter already. Nike’s CFO, Matthew Friend, foresees "a high single-digit decline" in sales. He marked softer traffic in Nike's factory stores, which used to sell discounted shoes and clothing. So, many on the market have been really scared that Nike may say goodbye to its former status of the long-time industry bellwether, which automatically provided its domination for many years.

An expected decline in sales numbers is due to "aggressive management of classic footwear lines", as well as challenges in digital sales, because Nike's direct-to-consumer division stopped generating growth. Decreasing wholesale orders in China added to the list of troubles. Even though the average target price for Nike by large investment houses is still above $100 per share, this could be too optimistic. Nike is now planning to roll out its new line-ups of $100-and-under sneakers but nobody is sure this will guarantee a business recovery. Nike is selling its top-end Air Force 1 sneakers for about $150 on the producer's website, yet its rival's Adidas is selling its three-striped white and black Samba and multi-coloured Gazelle sneakers within the price range between $100 and $120. However, even new Clifton 9 running shoes for $145, made by Hoka, are now among bestsellers in North America. This is a great competitive challenge.

Nike had been repeatedly disappointing the crowd's expectations on the company's forward guidance, which may contain additional dangers for its market dynamics. A negative trend for Nike's own projections for 2025–2027 is still here.