Nike shares hit historic lows amid strategic shifts and China demand slump

Nike is experiencing its largest stock price decline in history, with shares trading near $33. This represents an 80% drop from its 2021 peak and levels comparable to 2014. The company was also removed from the S&P 100 index in September.

Analysts attribute the decline to several strategic factors. A direct-to-consumer model initiated in 2020, intended to increase margins by bypassing wholesalers, resulted in high digital customer acquisition costs and significant logistics expenses. Furthermore, by withdrawing products from retail chains, Nike allowed competitors such as On and Hoka to capture market share. The company has also faced criticism for stagnant product innovation and an over-reliance on retro models.

Regional challenges are compounding these issues, particularly in China, where demand has plummeted. Recent financial results showed a 26% drop in Chinese revenue, contributing to a 4% decline in total global revenue. Deutsche Bank Research has lowered its price target for Nike from $37 to $33, maintaining a ‘Hold’ rating due to weaker-than-expected quarterly results.