Alex A.C.
Value/GARP Investor, Semiconductor & Financial Analysis, Electronics MEng
Nike sells expensive products of poor quality, which no longer works after 2010, when brands must offer either cheap goods or expensive quality. Gen Z and younger consumers care far less about the brand than 1980s and 1990s kids did, and the stock is back at 2014 levels, a decade erased. x.com
Nike's product quality has deteriorated for 20 years, which drives the bearish view regardless of the share price. Even its overpriced top items once had some quality; now they do not. @aleabitoreddit notes people choose On, New Balance, Vuori, Lululemon and even Uniqlo over Nike, leaving it to discount stores with its cool factor gone, at 26x forward earnings. x.com x.com
Nike just can't compete the way it used to: it no longer captures the market it once did, and that clearly isn't changing any time soon. The post-earnings reaction went as expected, with the stock already at its lowest since 2014 going in. x.com x.com
Nike has a quality problem and a relevance problem, made worse by no longer having Michael Jordan on the court. Under Armour sneakers at $50-70 can be more comfortable than $150 Nikes. Per a quoted post, Nike's direct sales fell 8%, digital 13% and wholesale 1%, and management's answer is $2.5 billion of cost cuts. x.com
Nike's brand concerns look priced in; stabilization, not sudden revenue acceleration, is what the speculative long needs. A few good campaigns and a return to large stores could help, though China consumers will be a drag. Short-term EPS is a poor indicator, and customers may return after trying other brands. x.com x.com
Nike is still super expensive even if it pulls a magic trick on margins, and the stock has been a buy-the-dip nightmare because the brand became uncool. It can keep existing while slowly fading, which is a terrible investment case. x.com x.com
Nike is a laggard not worth watching, because it is no longer a popular brand in Asia. Replying to @degrotepuinhoop, who sold amid ongoing selling pressure. x.com
Nike's addition of Alexandre Arnault to its board brings luxury-brand and consumer-marketing experience that should help boost its consumer reach and growth. Arnault was previously at Tiffany and deputy CEO of Moët Hennessy. The stock remains in the 'impossible to ignore' range. x.com
Nike, like other apparel makers, is uninvestable because a durable moat is near impossible in this business. Consumer preferences keep changing, requiring constant new marketing to keep people excited, and making a physical product leaves an inherently low-margin business with little long-term pricing power. A major turnaround is possible, but the business model gives no confidence in its long-term strength. x.com
Nike destroyed its brand with its direct-to-consumer push during Covid, one of the dumbest strategic mistakes by any megacap. Pulling Nike shoes from stores let consumers try On, Asics, Hoka, New Balance and others. Nike is not dead, but it may not be able to put the genie back in the bottle. Its latest report, per @HeyAlvaAI, showed Nike Direct sales down 8%, Greater China down 22% and a forecast high-single-digit revenue decline for the year. x.com
Nike's dividend yield, now high versus its ten-year history, is the new question for investors and makes the stock very interesting at these levels. The numbers have not bottomed, guidance was atrocious and parts of the business are getting worse, offset somewhat by better US wholesale. The guidance implies Nike will use some cash to fund the dividend, but it has plenty. The stock remains too expensive on earnings and too cheap on dividend yield. x.com x.com x.com x.com x.com
Nike is a stagnant company losing pricing power, pointing to more tough years for shareholders. Revenue fell 4% last quarter, the only line still shrinking while gross margin expanded, inventory fell 3% and North America grew 2%, per the quoted post. x.com
