Key Points:
Nike shares tumble after weak sales forecast
Stock down 60% from its all-time high
Company expects sales to drop significantly due to tariffs and leadership changes
Nike Stock Takes a Hit
Nike (NKE) saw its stock drop over 5% in after-hours trading on Thursday following a gloomy sales outlook. The decline follows a 1.5% dip during regular trading, pushing the stock below $70 and reducing Nike’s market valuation to under $100 billion—its lowest since 2020.
Despite concerns, Nike’s latest earnings report, covering the three months ending in February, exceeded expectations.
Revenue Beats Projections
Quarterly revenue fell 9% to $11.3 billion, surpassing analysts’ forecasts of $11 billion. Earnings per share came in at $0.54, well above Wall Street’s estimate of $0.30. CEO Elliott Hill acknowledged the company’s struggles, stating, “While we met expectations, we’re not satisfied with our overall results. We can and will improve.”
However, Nike faces ongoing pressure to reverse its stock’s downward trend. Over the past year, shares have dropped 28%, and they remain 60% below their 2021 record high.
Tough Road Ahead for Nike
Investor concerns stem largely from Nike’s weak future outlook. CFO Matt Friend warned that tariffs imposed by Donald Trump and internal executive changes could significantly impact sales in the current quarter. Nike expects revenue for the May quarter to decline by a “mid-teens percentage,” exceeding analysts’ projected 12.2% drop to $11 billion.
The sportswear giant, which has the backing of activist investor Bill Ackman with a $1.4 billion stake, now faces the challenge of navigating these headwinds while reassuring shareholders about its long-term prospects.