Nike stock price remains in a deep bear market ahead of the upcoming earnings. NKE has plunged to $73.70, down by over 56% from its highest point in November 2021. This crash has lowered its market cap from $300 billion to $109 billion, almost $200 billion wipeout.
Nike stock price has minimal downside ahead of earnings
Jim Cramer, the popular pundit on CNBC, believes that Nike has minimal downside as all negatives have been priced in. He believes that market participants have priced all negatives, meaning that the stock may bounce back soon.
He added that Nike stock was a coiled spring ready to pounce if the management confirms that it was back on track. He sees it jumping above $80 when it releases its financial results later this week.
Analysts are pessimistic about Nike’s results as the company faces challenges. The average revenue estimate is that its revenue will be $11.02 billion, a 11.36% drop from the same period a year earlier.
The company’s guidance for the next quarter will be weak, with the revenue expected to drop by 12.2% to $11 billion. Its annual revenue for the current financial year is expected to be $46 billion, a 10% drop from the last financial year.
On the positive side, analysts anticipate that Nike will return to growth and get to $46.54 billion in the next financial year.
Turnaround to go on
Nike stock price has crashed in the past few years as it faced numerous external and self-inflicted challenges. The most important external challenge is that competition in its key markets jumped. Some of this competition is coming from On Holding, the Swiss-based company, is one of the top competitors gaining market share.
Internally, Nike changed its strategy and focused mostly on the direct-to-consumer business. Its goal was that the approach would lead to more sales and higher margins.
However, in reality, the model did not lead to higher sales and margins. Instead, the company lost store shelves to some of its competitors.
The company, under Elliot Hill, the recently announced CEO, is working on boosting the company’s business. One approach is to improve its relationships with companies like Foot Locker and balance its wholesale and DTC.
He also wants to refocus its business with sports, a move that he expects will lead to more sales. He has already met with some top players like Christiano Ronaldo and Serena Williams to reinforce the ties. Further, he is working on innovation and cost-cutting.
Historically, some iconic brands have been turned around by their management. A good example of this is Larry Culp, who has turned GE around by breaking it apart.
Read more: Why Nike’s CEO believes turnaround efforts could hurt in the short term
Nike stock price forecast
The weekly chart shows that the NKE share price has crashed from $170 in 2021 to $73. It has remained below all moving averages, a sign that bears are in control for now.
On the positive side, it has formed a falling wedge pattern in the past few years. The upper side of this pattern connects the highest levels since November 2021. Also, the lower side links the lowest levels since September 2022.
These two lines are now about to meet, meaning that the Nike stock price will soon have a strong rebound in the next few weeks. If this happens, the next point to watch will be $120, the 50% Fibonacci Retracement point.
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