Nike (NKE) stock took a hit on Wednesday, dropping as much as 8% after the company missed revenue estimates in its latest earnings report. Investors were already wary of the stock heading into the earnings release, but the news of the missed revenue and the withdrawal of fiscal 2025 guidance sent shares tumbling.
The company reported earnings of $0.70 per share, which was better than Wall Street’s expectations, but revenue of $11.6 billion fell short of estimates by $50 million. Direct and wholesale revenue both saw declines year-over-year, with footwear sales dropping by 11.4% and apparel sales falling by 10.5%. Despite the challenges, equipment sales saw an increase of 13.6% year-over-year.
The decision to withdraw the fiscal 2025 guidance was attributed to the recent appointment of a new CEO, Elliot Hill. The company’s Chief Financial Officer, Matthew Friend, stated that the guidance was being reevaluated to position the business for future growth beyond fiscal 2026. Nike returned $1.8 billion to investors during the quarter through share buybacks and dividends and has $10.3 billion in cash on hand.
Following the drop in Nike’s stock price, traders are now looking for support levels to stabilize the stock. The market will be closely watching the 200-day Simple Moving Average (SMA) near $80 as a potential support level. If that level does not hold, then the focus will shift to the $71 support level from earlier in the summer.
Overall, the market reaction to Nike’s earnings release has been negative, with the stock experiencing significant volatility in the wake of the news. Investors will be closely monitoring the company’s future guidance and performance as it navigates through the challenges in the athletic apparel industry. Despite the recent setbacks, Nike remains a key player in the market and has the financial strength to weather the storm.
