In general, Nike stocks seem to fall into the category of “stocks that keep winning”. This is mainly because Nike is one of the most valuable brands in the world and is constantly growing in popularity. At this point, it has massive global appeal for a vast audience. She has also signed exclusive clothing deals with the NBA and NFL. Even despite the coronavirus pandemic, Nike shares are up more than 40% in 2020.
However, with the new conflict in Ukraine, investors could finally miss Nike. The escalation of this dispute could have massive implications for Nike’s sales and supply chain. This is all the more true as Europe is Nike’s second largest market.
As of this writing, the stock is down 30% from its all-time high. Nike has yet to comment officially on the Ukraine/Russia conflict. However, he has close stores in Russia as it cannot deliver to the region.
Why is this revenue report so important?
Nike is about to announce earnings on March 21, 2022. Investors expect revenue of $10.64 billion and EPS of 0.72. Earnings reports are also important because they provide investors with critical updates on company activities. For Nike, this particular report will have huge implications for its share price.
This is mainly because Nike is also expected to provide guidance for the rest of this year. This will give investors critical insight into the damage the Ukrainian conflict could cause.
Let’s take a look at what Nike could do over the next few months.
NOTE: I am not a financial adviser and simply offer my own research and commentary. Please do your own due diligence before making any investment decision.
Nike Stock Forecast (NYSE: NKE)
Nike (NYSE: NKE) is the world’s largest supplier of athletic footwear, apparel and equipment. It was founded in 1964 and is headquartered in Beaverton, Oregon. In 2020, the Nike “Swoosh” brand was valued at 32 billion. Nike is a member of the Dow Jones Industrial Average, making it one of the 30 most valuable companies in the United States.
- Increased competition: In recent years, competitors like Running (NYSE:ONON) and all the birds (Nasdaq: BIRD) have gained popularity. More recently, Lululemon announced that it would also be launching a shoe.
- Store closures in Russia: Nike is one of many brands to temporarily close all Russian stores. This report came after it had already halted online shopping in the country.
- Recently announcement a quarterly dividend of $0.305 per share.
Let’s take a look at the impact of these announcements on Nike stock.
Nike Stock Predictions
Nike has done a good job navigating the past two difficult years. In 2020, he stayed on top of the COVID-19 crisis and the stock rose 40%. In 2021, it continued to maintain its supply chain and the stock increased by 7%. Unfortunately, 2022 hasn’t been good for Nike so far. Its stock is down about 30% to start the year. However, Nike is far from the only struggling company. This downside could be related to issues like higher than expected inflation and rising interest rates.
In its latest earnings report (Q2 FY2022), Nike reported revenue of $11.4 billion. This was up 1% year over year (YOY). It also reported net profit of $1.34 billion, up 6.8% year-on-year.
That said, let’s see if you should buy Nike stock or not.
Is Nike a buy? Potential Benefits
Even under normal circumstances, it is very difficult to predict what will happen in the world. However, in recent years this has been virtually impossible. That’s because there are so many macroeconomic events going on that it’s hard to keep up. The world’s “uncertainty meter” hasn’t been this high since the 2008 financial crisis.
Here are some examples of massive events currently taking place:
- Will Putin escalate the war in Ukraine? Could this trigger World War III?
- What role will Russian sanctions play on the already damaged global supply chain?
- Will another COVID-19 strain emerge?
- Inflation is the highest in decades. Will it reduce consumer spending and hurt the economy?
- Will the stock market crash when the Fed raises interest rates?
- Gas prices are at their highest. What impact will this have on the economy?
Whatever action you are considering right now, the short term will be filled with uncertainty. Keep this in mind when making decisions.
That said, Nike has done a good job of weathering the storms so far. Should he overcome the pandemic shutdowns, he should be able to fight through the Ukraine/Russia conflict.
Beyond these immediate short-term issues, Nike’s future still looks solid. It has one of the most valuable brands in the world and has dominated the industry for decades. Even some of its subsidiary brands, Jordan, are worth more than entire companies. On top of that, Nike supplies the entire NBA, NFL, and almost all major NCAA teams.
If you’re a long-term investor, now might even be a great time to buy Nike shares at a discount.
For what it’s worth, Nike also exceeded its last four earnings expectations. In two cases, it beat up to 32% and 84%.
So what about the cons?
Is Nike a buy? Potential disadvantages
The biggest risk to Nike stocks right now is short-term volatility. There is a lot of uncertainty about what may happen with Ukraine/Russia. Depending on how these scenarios play out, it could have a huge impact on Nike’s business. For example, the invasion could hurt the company’s sales in Europe, where 25% of Nike’s revenue comes from.
Moreover, Nike must also face sanctions related to the war against Moscow. These sanctions change from week to week, but so far include airspace bans and changes to shipping routes. All of this is just another challenge for East-West supply chains. If this dispute drags on for months or even years, it could hurt Nike’s global sales
In addition to the conflict in Ukraine, other risks still need to be taken into account. For example, inflation could be a huge problem for a retailer like Nike. Rising inflation could squeeze Nike’s profit margins and reduce consumer spending.
Finally, a longer-term question is whether Nike will remain popular with younger generations. In recent years, companies like Allbirds and On Running have emerged as competitors. So far, none of these companies have really come close to a real threat. However, they are both popular with young people.
Nike is a company that was established in 1964. So far, it has done an amazing job maintaining its popularity across generations. However, clothing and fashion are notoriously fickle. Over the next few years, Gen Z will continue to enter the workforce and start earning an income. Will these buyers be as loyal to Nike as the old ones? Or will they prefer to wear Allbirds, Clouds or Lulu shoes?
Hope you found these Nike stock predictions useful! As usual, please base all your investment decisions on your own due diligence and risk tolerance.
A graduate of the University of Miami, Teddy studied marketing and finance while playing four years on the football team. He has always had a passion for business and has used his experience from a few personal projects to become one of the top rated business writers on Fiverr.com. When he’s not pounding words on paper, you can find him pounding notes on the piano or traveling to a random location.