The Adidas share price has been in a strong downward trend in the past few months, making it the top laggard in the DAX Index. It plunged to a low of €153.90, down by over 41% from its highest point this year. This crash has brought its market cap from a peak of €47 billion to the current €27 billion.
Adidas stock crash has made it a bargain
Adidas share price has plunged in the past few months, making it one of the top laggards in the DAX Index. This crash happened even as the company published strong financial results recently.
These numbers showed that the company was doing well. Its Brand adidas revenue grew to a record level of €6.6 billion in the third quarter of the year. This growth happened across its markets, divisions, categories, and channels.
Most importantly, the company’s operating profit jumped by 23% to over €736 million. At the same time, the company’s revenue rose by 9% in the first nine months of the year.
The management also boosted its guidance, moving the EBIT range from between €1.7 billion and €1.8 billion to about €2 billion.
Therefore, the Adidas share price is falling as investors anticipate slow growth amid Donald Trump’s tariffs and weaker margins over time. However, the management has executed well and is seeing results. As such, while its North American business deteriorated by 5%, it offset this by its growing in Europe, Latin America, and Emerging markets.
For example, its footwear revenue jumped by 11% in the last quarter, as it continued to gain market share in areas like running, football, and training.
The company’s business also benefited from the apparel business whose revenue rose by 16%. This growth was offset by the performance in the accessories segment, which dropped by 1% during the quarter.
Meanwhile, the ongoing Adidas stock price crash has left behind a bargain in plain site. Data shows that the company has a forward PE ratio of 20, slightly lower than the S&P 500 estimate of 23.
Most importantly, the valuation multiple is much lower than that of Nike, which has a forward PE multiple of 37. It is also much lower than On Holdings’ 61.
Adidas stock has another catalyst in that the World Cup is coming up in June next year. Historically, Adidas and Nike do well in the World Cup year.
Adidas share price technical analysis
Adidas stock chart | Source: TradingView
The weekly timeframe chart shows that the Adidas share price has been in a strong downward trend in the past few months, moving from the year-to-date high of €261 in February to the current €153.
Adidas has moved below the important support level at €160, its lowest level in August this year. It has also moved below the 61.8% Fibonacci Retracement level at €156.80.
The stock formed a death cross pattern as the 50-day and 200-day Exponential Moving Averages (EMA) crossed each other. Also, it has continued to form a series of lower lows and lower highs.
Adidas also remains below the Ichimoku cloud and the Supertrend indicators. Therefore, the stock will likely continue falling in the near term. If this happens, the next key support level to watch will be at €140. In the future, however, there is a likelihood that the stock will bounce back as investors buy the dip. If this happens, the next key resistance level to watch will be the psychological level at €200.
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