Over the years, Nike Inc. NKE has been an extremely volatile stock for some reason, even when trading in the double digits and before the market decimation.
This volatility continues in a big way after Nike’s fourth quarter report after Monday’s close.
Nike runs downhill: Nike hit an all-time high in November at $179.10 and pulled back to end the month at $169.24. It is now trading in the red for the seventh month in a row, and at the current low of the move ($103.46) it was down 42%. Now that’s a weak stock.
Buyers enter the Nike report before the fourth quarter: Nike had its ups and downs with the broader market, the rebound from the recent low took the issue to $123.82 on June 8, but it was unable to hold onto those gains.
Buyers looking to extract alpha with a pre-earnings rally set up a double bottom in the $104.50 area last week.
They were rewarded when the issue peaked at $113.21 on Monday but weakened to close at $110.50. Many of these preemptive buyers may have been completely off the mark before the report.
Nike Q4 Beat and more: After Monday’s close, the company reported quarterly earnings of 90 cents per share, higher than analysts’ consensus estimate of 81 cents.
The company reported quarterly sales of $12.2 billion, which beat analysts’ consensus estimate of $12.07 billion.
Additionally, the board authorized a new four-year, $18 billion program to repurchase Class B common stock.
On a negative note, following the report, several Wall Street analysts cut their price targets, essentially chasing the stock price.
Premarket preparation intake: When the issue was covered on the show on Tuesday, it was trading down nearly $3 in the $107 area.
Co-host Denis Dickwho kept a close eye on the after-hours action, saw the problem rise higher than the number of stocks to give up those gains – and more.
“They must have said something on the conference call that wasn’t good. I wouldn’t be surprised to see Nike finally challenge the low for the move to $103.46.
The writer of this article noted potential support ahead of the low for the pair’s move from last week’s lows of $104.50. From a longer-term perspective, the monthly chart’s ugly downward trend is a warning sign that the problem could be headed into the double digits.
NKE Price Action: The issue caught a bid with the broader market in broad daylight and exploded up to $114.05. Nike then reversed course, similar to the broader market.
The ensuing decline broke the pair’s lows at $104.50, falling to $104.
The stock eventually fell 6.98%, ending the session at $102.78.
The discussion on the issue from Tuesday’s show can be found here:
Photo courtesy of Nike.