Nike Stock Plummets Today: Reasons Behind the Decline
Nike experienced a significant decline in stock price today following its fiscal second-quarter earnings report. Despite exceeding earnings estimates, the company’s future guidance was less than favorable, disappointing investors.
Nike’s Fiscal Second-Quarter Performance
Nike reported revenue of $12.4 billion for the quarter, marking a 1% increase compared to the previous year. This figure surpassed analyst expectations of $12.21 billion.
- Wholesale Revenue: Increased by 8% to $7.5 billion.
- Nike Direct Revenue: Decreased by 8% to $4.6 billion.
- China Sales: Fell by 17%.
- North America Revenue: Grew by 9%, indicating successful turnaround efforts.
Gross Margin and Earnings Impact
The company’s gross margin declined by 300 basis points to 40.6%, influenced by rising tariffs. Consequently, earnings per share dropped 32% to $0.53, although this still exceeded the expected $0.37.
Nike’s Stock Decline
As of 11:00 a.m. ET, Nike’s stock was down 9.1%, reflecting a broader concern about the company’s guidance amid a longer-than-expected turnaround period. The current price of Nike shares stands at $58.71, marking a decrease of 10.54%.
Key Financial Data
| Market Capitalization | $97 billion |
|---|---|
| Day’s Price Range | $58.22 – $60.38 |
| 52-Week Price Range | $52.28 – $82.44 |
| Volume | 109 million |
| Average Volume | 16 million |
| Dividend Yield | 2.45% |
Looking Ahead
For the upcoming third quarter, Nike anticipates a revenue decrease of low single digits, projecting around $11 billion. This forecast aligns with seasonal trends but also reflects ongoing challenges. The company expects its gross margin to decline by 175-225 basis points in the same timeframe.
While Nike’s turnaround efforts appear to be on the right track, the market reaction underscores investor skepticism regarding short-term profit growth. CEO Elliott Hill noted, “Nike is in the middle innings of our comeback,” emphasizing confidence in their long-term strategies.
