Nike Inc. (NYSE: NKE) stock is battling the longest losing streak since its IPO in 1980, mainly due to the Chinese market scenario. The share price plummeted consecutively amidst declining demand in China. It is causing the footwear and apparel giant to lose 20% of its market capitalization in 2023.
Nike Inc. (NKE) Stock – Are its Financials Strong Enough to Fight the Chinese Situation?
China has always been a critical growth market for Nike, but the current macroeconomic scenario in the country is creating troubles. Investor sentiment dwindled for the sportswear giant after a lackluster earnings report on June 29, 2023. Nike’s primary wholesale partner, Foot Locker, also reported negative earnings and lowered guidance.
Considering the global financial scenario, the buyers are getting selective in spending on non-essentials. Their avid customers were the millennials, who face student loan issues and have been skeptical about spending on soft goods like clothes and shoes.
Nike Inc. (NYSE: NKE) declined 6.90% in a week, 10.56% in a month, and 16.70% YTD. Retail growth in China slowed to 2.5% in July 2023, estimated at around 4%. Over the last twelve months, S&P500 gained 7% while NKE stock is down by 12.30%.
Nike Inc. (NKE Stock) – Technical Analysis
NKE stock, at press time, traded at $98.75, falling 2.67%; previous close and open were at $101.46 and $96.48, respectively. The 52-week range is from $82.22 to $131.11, showcasing that further drop could create new lows. With a volume of 20.90 Million shares, the market cap is $153.169 Billion.
The trailing twelve-month (TTM) price-to-earnings ratio is 30.57, indicating that the stock price is fairly valued. At the same time, the (TTM) earnings per share (EPS) is $3.32, hinting at financial stability. Analysts placed a 2.56 rating for moderate buy and estimated a price target at $131.96 with a 33.6% upside.
Nike reported earnings on June 29, 2023, where the reported revenue of $12.825 Billion surpassed the expected value of $12.581 Billion by 1.94%. But in comparison, the reported earnings of $0.66 per share failed to beat the estimated value of $0.677 per share by 2.57%. This anomaly caused NKE stock to fall 9.42% before pulling back.
Compared to the previous earnings, revenue gained 4.83% while EPS fell by 33.75%. The subsequent earnings will be reported on September 26, 2023, where the revenue should be around $13.006 Billion, and EPS could be $0.747, a considerable jump from previous estimations.
Operating expenses gained 8.40% to $4.37 Billion, while operating margin is 11.55%. Net income fell 28.35% to $1.03 Billion, net profit margin declined by 31.63% to 8.04, while profit margin was 9.90%. The (TTM) revenue is $51.22 Billion, while the year-over-year (YoY) quarterly revenue growth is 4.80%.
Nike Inc. (NKE) Stock – How Bad is the Fall?
The recent drop in NKE stock price is 14%, taking the share price below $100.00. When 50EMA crosses 200EMA from above, it’s a death crossover and makes the stock bearish in the long term. NKE stock had a death crossover on May 31, 2023. Yet, the experts feel that the price could reverse and try to cross $100.00.
The buying zone seems firm, so a drop below that is unlikely. If the trend reverses, the price must sustain above immediate resistance at $113.47 to be strong enough to cross the selling zone. If the price action shows strength, it can cross $130.00 in the coming weeks.
Disclaimer:
The views and opinions stated by the author or any people named in this article are for informational purposes only and do not establish financial, investment, or other advice. Investing in or trading crypto assets and stocks comes with a risk of financial loss.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
Source: https://www.thecoinrepublic.com/2023/08/24/nike-inc-nke-stock-facing-biggest-losing-streak-since-1980/