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Should you buy Nike stock? (April 2024)
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Nike stock analysis. Ticker: $NKE
Nike stock is down almost 50% from its all time high taking the company’s market cap to 138 billion dollars. Shares are now lower than they were at the beginning of 2020 which is pretty unusual for a company of Nike’s caliber. But there’s a clear reason why.
Nike’s revenue on a trailing twelve month basis is up less than 2% while operating income has fallen around 17% since 2021. Profits have also fallen with net income down 13% and net income margin falling to 10%. And company guidance suggests revenue will continue to decline over the next couple of quarters.
There are several reasons for this performance. The first is a difficult economic environment with consumers pulling back spending especially in China.
However, there’s a sense that Nike also has itself to blame and management admitted the company hasn’t done enough to drive newness or innovation. Competition from the likes of Hoka and On Cloud also seems to be gaining momentum with On Cloud recently hitting 2 billion dollars in annual sales.
So Nike is working to improve execution and recoup lost revenue. After years of pushing direct-to-consumer sales, the company is backtracking and planning to lean more heavily into retailers. This is a significant reversal of a DTC strategy that began all the way back in 2017. The launch of Air Max Dn and this year’s olympics can also provide a much needed boost.
#nikestock #investing #stockstobuy #3mb
Nike stock is down almost 50% from its all time high taking the company’s market cap to 138 billion dollars. Shares are now lower than they were at the beginning of 2020 which is pretty unusual for a company of Nike’s caliber. But there’s a clear reason why.
Nike’s revenue on a trailing twelve month basis is up less than 2% while operating income has fallen around 17% since 2021. Profits have also fallen with net income down 13% and net income margin falling to 10%. And company guidance suggests revenue will continue to decline over the next couple of quarters.
There are several reasons for this performance. The first is a difficult economic environment with consumers pulling back spending especially in China.
However, there’s a sense that Nike also has itself to blame and management admitted the company hasn’t done enough to drive newness or innovation. Competition from the likes of Hoka and On Cloud also seems to be gaining momentum with On Cloud recently hitting 2 billion dollars in annual sales.
So Nike is working to improve execution and recoup lost revenue. After years of pushing direct-to-consumer sales, the company is backtracking and planning to lean more heavily into retailers. This is a significant reversal of a DTC strategy that began all the way back in 2017. The launch of Air Max Dn and this year’s olympics can also provide a much needed boost.
#nikestock #investing #stockstobuy #3mb
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