Nike falls to the lowest levels since 2017 📉

Among the companies most impacted by Trump's tariff announcement, Nike (NKE.US) stands out, losing more than 11% today. This marks the biggest drop since the financial report in June 2024, pushing the stock price to its lowest level since late 2017.

Nike’s biggest one-day decline since June 2024 earnings report Source: Bloomberg Finance L.P.

Nike’s losses are driven by several factors that heavily weigh on the company. First, Trump's announced tariffs have significantly amplified investor concerns about a recession and economic stability. As consumer spending weakens, sectors that depend on discretionary spending face the highest risk of demand declines. The sportswear industry is one such sector, as consumers can forgo athletic apparel during tough economic times. Nike, in particular, has been losing market share, adding to investor worries.

This situation is further complicated by Nike’s planned inventory clearance, as the company shifts back to focusing on professional sports apparel. However, the plan to sell off excess stock at lower prices is now uncertain given the looming weakness in consumer demand. This could extend Nike’s period of weaker profit margins, which have already been declining since Q4 2023/24.

At the same time, Trump's tariffs hit Asia particularly hard, especially Vietnam, Indonesia, and China, which collectively account for 95% of Nike's shoe production. The proposed tariff rates—Vietnam 46%, China 54%, and Indonesia 32%—will severely impact Nike’s key suppliers, adding yet another layer of pressure on its margins.

As a result, the spread between Nike’s forward P/E ratio and its trailing 12-month P/E continues to widen, with the latter remaining negative for the longest period since the early 21st century. This trend indicates a valuation reflecting worsening company outlooks over the next 12 months. Additionally, some projected earnings will likely face further downward revisions as Nike adapts to the new economic environment.

W efekcie widzimy utrzymujące się pogłębienie spreadu między prognozowanym P/E, a wskaźnikiem P/E za ostatnie 12 miesięcy, który pozostaje poniżej zera w najdłuższej serii od początku XXI w. Taka sytuacja wskazuje na wycenę sugerującą pogarszanie się perspektyw spółki w ciągu najbliższych 12 miesięcy. Jednocześnie warto pamiętać, że część prognozowanych zysków najprawdopodobniej ulegnie kolejnym rewizjom w dół wobec dostosowywania się do nowego otoczenia. 

Nike’s trailing P/E stays below forward P/E for the longest period in more than 25 years. Source: Bloomberg Finance L.P.

As a result, Nike’s stock has fallen to its lowest level since 2017, breaking through the support level established during the COVID-19 sell-off for the first time.

Nike shares fall below $60 for the first time since 2017 . Source: xStation