Should I Buy Nike (NKE) Stock Right Now?

With shares in Nike (NKE) stock at some of the lowest in 10 years we take a look at the options of buying Nike stock right now.

Rewind back to 2021 for a second. Shares in Nike (NKE) stock had reached their highest ever at around $180 dollar a share. Covid lockdowns, furlough and a surge in demand for all things swoosh put Nike (literally) at the highest peak they have ever been to. Fast forward to July 2024 and it’s a bit of a different story. Nike shares had fallen by 59% from their 2021 highs losing almost a fifth of their value with economic uncertainty, political unrest and fierce competition from new brands on the scene like HOKA, On Running & Castore as well as a new found adidas wearer. The decline marked their worst day since Nike went public in 1980. As with any stock, whether its the previously named Blue Ribbon Sports brand or a blue chip stock like Microsoft there will always be highs & lows. When a stock falls it’s easy to write off a company, but with a huge global sportswear brand like Nike it’s not that straight forward. Whether you’re just into “copping heat” or the more business side of the sneaker game, investing in stock can always be a risky game. There’s never a sure thing as some brokers might say, but if you do the research and play the long game buying a stock like Nike (NKE) could reap its awards at a later date. So the question is should I buy Nike (NKE) stock right now whilst the price is down?

Where did it go wrong for Nike?

After the swoosh brands’ stock price fell to a 10 year low in July 2024 Nike responded quickly re-hiring vice president and general manager Tom Peddie, who previously retired in 2020, to oversee retail partnerships as the swoosh brand looked to rebuild relations with key retailers such as Footlocker as well as the recent expansion of their loyalty scheme with JD Sports to the USA. The move was Nike saying that basically they had focused too much on driving sales through their own retail stores and website, moving focus away from their third party retailers. Hence the move for a more wholesale driven operation, as Nike previously looked to lean out their wholesale accounts they were only shooting themselves in the feet (or sneakers), allowing more retail space for brands like HOKA & On Running to move in where previously swoosh product had dominated the shelves & floorspace. You also probably remember a few years back when the smaller independent retailers just simply had their accounts closed as Nike looked to focus more on its own retail & digital channels. Nike’s direct to consumer strategy basically didn’t pay off with their latest results covering the 3 months to the end of May 2024 showing a slip in sales by 8% to $5.1 billion.

Weathering the economic “sneaker” storm

There’s also a lot going on in the world right now. The invasion of Ukraine, government debts from COVID, Brexit in the UK and a cost of living crisis has really tightened people’s purses. That’s not to say Nike haven’t already weathered the economic storm before. There highest share price was literally a year after the biggest global pandemic in over a hundred years, go figure. Having personally worked in this industry since the mid noughties it seems like there’s always been a recession, uncertainty or some sort of political unrest across the world. A company like Nike is a household name and is probably more resilient to factors out of its  own control like economic uncertainty than others. If you had bought $1000 of Nike (NKE) stock 20 years at $8.66 per share that would be worth around $8500 in 2024. Factor in stock price appreciation and company dividends which were around $20 per share over 20 years and the total value would be more like $10,5000. Obviously the best time to sell would of been the peak in 2021 for an even greater return.

Trend analysis

We can talk about recessions & retail space all day but trend analysis also plays a key role. Nike have probably become overdependent on key styles from their Jordan range as well as the Dunk & the Air Force 1. Coming at a slightly higher price point than the classic gum soled silhouettes from adidas, the exclusively on these products doesn’t feel as exclusive as perhaps it once did in a pre-pandemic era of ‘The Ten’ from Virgil Abloh’s OFF-WHITE. Sneaker resellers like StockX have also noticed the switch in popularity from what was once the powerhouse of Air Jordans back in 2019 but that’s not to say the demand for Jordans has really gone anywhere. As a younger demographic carves out its own styles and silhouettes there’s also maybe a bit of an age thing going on as a 21 year old has no real connection with Michael Jordan as say someone who grew up in the 90s. The weird thing is with adidas is that it’s the classic styles that are driving sales, but inventory has always been kept low to drive demand. From a swoosh perspective maybe there is more of a sense of over supplied styles like the Air Force 1. As much as a brand like Nike can massively influence trends with its hefty marketing budgets, they cannot control trends as much as the power of content creators and celebrities across social media. The reality is we’ll probably be talking about adidas & Nike in reverse roles in a few years.

So what’s next for Nike?

The recent Olympic games in Paris has seen a surge in demand for Nike products worldwide. Nike is also set to report its Q1 2025 earnings on September 2024 with Wall Street analysists expecting the swoosh brand to report a slight increase in sales of $12.88 billion up from $12.83 billion from the comparative quarter. Nike has surpassed earnings expectations for three straight quarters but has only exceeded sales estimates in two of its last four quarterly reports. With a focus more on wholesale and tapping back into their core running consumer, it would be expected for Nike to continue on their upward trend since they went public in 1980. Should I buy stock in Nike (NKE)? Stock values will always continue to rise just like Nike has over the last 44 years, the latest dip in July is a mere hurdle for the swoosh brand. It’s just a case of getting back on track (excuse the pun) for what is still (and probably always will be) one of the biggest sportswear brands on the planet.