Nike shares closed at $39.09 on Monday, Aug. 17, marking a near 12-year low. This puts the stock down roughly 78 percent from its monthly closing high of $169.15 in November 2021.
The decline has erased approximately $200 billion from Nike's market capitalization. Market strategist Charlie Bilello characterized this as the largest drawdown in Nike's history as a public company.
The company navigated recessions, boycotts and supply chain disruptions without experiencing a decline of this magnitude. Current pressure originates primarily from its Nike Direct segment, which sells products directly to consumers and bypasses wholesalers.
In its fiscal fourth quarter, Nike Direct revenue fell 7 percent, driven by a 12 percent drop in digital sales. This segment, which Nike spent a decade developing as a growth engine, now weighs on overall results.
Greater China reported eight consecutive quarters of sales declines. Fourth-quarter China revenue fell 12 percent on a reported basis and 17 percent on a constant-currency basis. Local competitors like Anta and Li Ning are gaining market share through competitive pricing and product offerings, not solely due to currency fluctuations.
Nike's response involves a significant strategic shift. Beginning in January 2027, the company will discontinue partnerships with over 1,000 third-party online storefronts in China. Sales will consolidate into Nike's proprietary app, website and official flagship stores on platforms like Tmall, JD.com and Douyin.
This decision has already hurt distributors. Topsports, which derives one-fifth of its revenue from Nike, has seen its stock price fall sharply. Nike is prioritizing brand control, a move unlikely to yield quick financial returns.
JPMorgan analyst Matthew Boss downgraded Nike to Underweight on Aug. 4, lowering his price target to $40 from $47. Boss contends that current consensus earnings estimates are roughly 20 percent too high. He expects the China strategy reset and ongoing North American store closures to maintain pressure on profit through fiscal 2028.
This outlook contrasts with the broader analyst community, where 12 Buy ratings outweigh two Sells. The division centers on timing. Bullish investors view Nike's actions as beneficial long-term strategic decisions. Boss sees the company front-loading pain that Wall Street has not yet fully accounted for in its valuations.
The market is not fully appreciating the significance of Nike bringing in David Denton as its new CFO. Denton previously served as CFO at Lowe's and Pfizer. Companies typically recruit outside financial leadership to instill discipline when facing the most difficult phases of a turnaround, not when performance is strong. This appointment signals a more difficult path ahead than many anticipate.
