Japan is now thinking of disaster plans. Plans that will force them to sell even more billions worth of U.S. bonds. This can cascade into a disaster, not just for Japan, but for the United States and the dollar.
Nike’s stock experienced a significant decline of up to 19% on Friday, following an announcement that the company anticipates a greater than previously expected revenue drop in the coming year. This update came after Nike revealed its projection for a mid-single-digit revenue decrease in 2025, which includes an anticipated 10% fall in the first quarter alone. Initially, Nike had forecasted an overall sales increase for 2025.
This steep drop in stock value marks Nike’s most substantial single-day decline since 2001. The revised guidance highlights an ongoing trend observed in Nike’s fiscal 2024 fourth quarter, reported after the market closed on Thursday. The company disclosed that its quarterly revenue for the fourth quarter decreased by 2% from the previous year, totaling $12.61 billion. This figure fell short of Wall Street’s expectations of $12.86 billion. However, Nike’s earnings per share of $0.99 surpassed analysts’ predictions of $0.66. Direct-to-consumer sales also saw an 8% decrease compared to the same quarter the previous year, amounting to $5.1 billion.
During the earnings call, CEO John Donahoe described fiscal 2025 as a “transition year” for the company. Despite efforts to boost sales growth, the year has been underwhelming for Nike’s stock performance. A market analyst noted that the weak sales figures were a major concern following the earnings release.
In light of these developments, a prominent financial analyst downgraded Nike from Overweight to Equalweight, reducing the price target from $114 to $79. The analyst pointed out that while Nike is undergoing strategic changes, its recent performance has been marred by quarterly shortfalls and lowered guidance. This has cast doubt on Nike’s long-term growth and profitability prospects, which are now viewed as uncertain and lower than previously assumed.
Nike’s stock had already been on a downward trajectory, falling more than 17% over the past year, in stark contrast to the S&P 500’s 26% gain during the same period. This decline reflects investors’ growing concerns about the company’s slowing growth.
Another senior equity research vice president expressed skepticism about the likelihood of investors seeing this drop as a buying opportunity. He suggested that Nike’s shares might remain under pressure until the company can demonstrate successful new product innovations and regain investor confidence.
Nike’s product pipeline has been under close scrutiny as the company, based in Oregon, strives to maintain its competitive edge in the athletic footwear market against rivals like Adidas and newer competitors such as On and Deckers’ Hoka brand. Despite the challenges, Nike executives remain optimistic about their plans to scale new products, which they believe will positively impact the company’s financials by year’s end.
Major Points:
- Nike’s stock dropped by up to 19% after announcing a larger than expected revenue decline for the upcoming year.
- The company forecasts a mid-single-digit revenue decrease in 2025, including a 10% drop in the first quarter, contrary to earlier predictions of sales growth.
- Fiscal 2024’s fourth-quarter revenue fell by 2% to $12.61 billion, missing Wall Street estimates, though earnings per share exceeded expectations at $0.99.
- Analysts downgraded Nike’s stock and lowered its price target due to ongoing quarterly shortfalls and reduced guidance.
- Nike remains optimistic about new product launches, aiming for significant financial improvement in the second half of the year to regain investor trust.
Fallon Jacobson – Reprinted with permission of Whatfinger News
