Why Nike Stock Is Falling: Giant Tanks Sneaker Hits 4-Year Low

Top line

Nike shares fell on Friday, setting multiple questionable milestones as the sneaker and sportswear company faces investor discontent.

Nike store in Shanghai.

NurPhoto via Getty Images

Key facts

Nike shares were down 19.2% as of 11 a.m. ET, marking their biggest one-day decline since 2001 and the second-worst day in the publicly traded company’s 44-year history.

The decline sent Nike’s share price to its lowest level since March 2020; apart from this month, when the global stock market briefly crashed due to Covid-19 lockdowns, this is Nike’s lowest price since January 2019.

The decline was driven by Nike’s Thursday afternoon earnings report, which revealed a 2 percent decline in quarterly sales ending May 31 and a warning that the company expected a 10 percent year-over-year decline, far worse than the 3 percent decline indicated by the consensus analysts.

UBS analysts led by Jay Sole wrote to clients on Friday that “Nike’s fundamentals are much worse than we thought” and “there will be no quick rebound in Nike’s earnings,” downgrading Nike’s stock from “buy” to “neutral.”

Receive Forbes text alerts with breaking news: We’re introducing text message alerts so you’ll always know the biggest stories shaping the headlines of the day. Text “Alerts” to (201) 335-0739 or sign up Here.

Why are Nike shares falling?

Nike is expected to report a year-over-year decline in revenue and profit in the fiscal year ending in May 2025, with most of the damage coming from a slump in its China business, which analysts estimate will be 10% below the 2021 record.

It’s been a bad time overall for sportswear and sneaker companies — shares of Lululemon (down 17% over the past three years), Adidas (down 26%) and Under Armor (down 68%) — and for multinational companies with a large share of sales in China (see Apple). Nike has also grappled with a marked decline in interest in its products — global search volumes have fallen steadily year-over-year since July last year and fell by about 10% last month, according to Goldman Sachs research. “Increasing competition” in the sportswear and footwear industry also “doesn’t help,” noted Jefferies analysts led by Randal Konik, citing newer market entrants such as Alo and Hoka as threats to Nike’s market dominance. Nike stock is trading at its lowest price-to-sales valuation since 2013, indicating waning investor confidence in the Oregon-based company’s ability to grow profits.

Big number

$27.5 billion. That’s how much Nike lost in market value on Friday. That’s a huge chunk of the total market capitalization of the next-largest sportswear companies, Adidas (valued at $43 billion) and Lululemon ($38 billion).

A surprising fact

Nike shares are down 48% over the past three years, including dividends, far worse than the S&P 500 Index’s 34% return.

Key quote

“Investors will have to be patient until the situation turns around,” wrote Evercore ISI analysts led by Michael Binetti, maintaining a buy recommendation for the company.

Forbes valuation

Nike co-founder Phil Knight’s fortune fell by $5.5 billion on Friday, more than any other billionaire, according to our real-time tracker. Knight, 86, and his son Travis Knight own about 3% of Nike stock, according to FactSet.