Nike shares plunge as company forecasts steeper sales decrease in 2025 than anticipated

Nike (NKE) Stock Plummets 19% After Revenue Decline Announcement

In a shocking turn of events, Nike’s stock took a nosedive of 19% on Friday following the company’s announcement that it anticipates a greater revenue decline in the upcoming year than previously projected. The sportswear giant revealed that it expects revenue to drop in the mid-single digits for the fiscal year 2025, with a significant 10% decrease forecasted for the first quarter. This stark contrast comes after Nike had initially set its sights on achieving overall sales growth in 2025.

The plunge in Nike’s stock price marks its most significant single-day decline since 2001, leaving investors and analysts alike reeling from the news. The company’s fiscal 2024 fourth-quarter results further added to the gloom, with quarterly revenue slipping by 2% from the previous year to $12.61 billion, falling short of Wall Street’s expectations of $12.86 billion. Despite this, Nike managed to surpass analysts’ estimates for earnings per share, coming in at $0.99 compared to the projected $0.66. However, the decline in Nike’s direct-to-consumer sales by 8% year-over-year to $5.1 billion raised concerns about the company’s performance.

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Nike’s CEO, John Donahoe, acknowledged the challenges ahead, describing fiscal 2025 as a transitional year for the business. As the company attempts to reignite sales growth amidst a lackluster year for its stock, industry experts have voiced their apprehensions. Morningstar equity analyst David Swartz criticized Nike’s weak sales figures, emphasizing that it remains a significant area of concern.

Following the disappointing earnings call, Morgan Stanley analyst Alex Straton downgraded Nike to Equalweight from Overweight and slashed the price target to $79 from $114. Straton expressed skepticism about Nike’s long-term growth and profitability trajectory, citing performance inconsistencies and guidance cuts as key contributing factors.

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The company’s stock had already experienced a 17% decline over the past year, triggering apprehensions among investors about Nike’s ability to sustain growth in the face of stiff competition. Wedbush senior vice president of equity research, Tom Nikic, expressed doubts about a quick rebound, predicting a prolonged period of uncertainty for Nike until tangible product innovations materialize.

As Wall Street closely monitors Nike’s product pipeline, the company is emphasizing its commitment to scaling new products and paving the way for improved financial performance by the year-end. Nike CFO Matthew Friend reassured investors during the earnings call that significant progress is expected in the second half of the year, driven by new product launches.

With the future of Nike’s stock hanging in the balance, industry observers are keen to see how the company’s strategic initiatives will unfold in the coming months. As the sportswear giant navigates a challenging landscape, investors are holding their breath to see if Nike can emerge stronger and more resilient in the face of adversity.

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Stay tuned to Extreme Investor Network for more updates on Nike’s financial performance and market trends.

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