Nike’s stock experienced a sharp decline following a forecast predicting an unexpected drop in annual sales, exacerbating investor concerns about the sportswear giant’s efforts to counteract market share erosion from emerging competitors such as On and Hoka.
Friday marked a historic low for Nike’s stock, which plummeted by 20 percent, resulting in a $28.41 billion reduction in the company’s market valuation. This downturn followed the company’s Thursday announcement, projecting a mid-single-digit percentage decrease in fiscal 2025 revenue, contrary to analysts’ expectations of a near 1 percent increase.
"Nike is adopting a strategy of issuing the most conservative guidance possible, aiming to set a low benchmark that they can surpass," commented Art Hogan, chief market strategist at B Riley Wealth.
The forecast had a ripple effect on shares of rival sportswear companies and retailers across Europe, the UK, and the US. British sportswear retailer JD Sports closed with a 5.4 percent loss, while Germany’s Puma declined by 1 percent. In contrast, Adidas’s shares experienced a marginal uptick.
"Nike has been under sustained pressure for several years. With the valuation now significantly reduced, there’s potential for recovery through strategic sponsorships, though this turnaround will not be immediate," Hogan added.
According to GlobalData, Nike’s market share in the US sports footwear category fell to 34.97 percent in 2023, down from 35.37 percent in 2022 and 35.4 percent in 2021.
