Nike (NYSE: NKE) shares have continued their steep descent, touching their lowest level since September 2024. The stock recently traded at $38.94, representing a decline of over 78% from its all-time high. This persistent sell-off reflects growing investor impatience with the company's turnaround efforts, and the near-term outlook remains clouded by uncertainty.
Technical picture points to more downside
The weekly chart shows NKE in a prolonged downtrend, transforming a former blue-chip favorite into a fallen angel. The stock has broken below the critical support level of $52.53, which marked its April 2024 low. Currently, the price sits below all major moving averages, indicating that bears are firmly in control.
The Relative Strength Index (RSI) has dropped to 32, but it has not yet reached oversold territory, suggesting that further declines could be in store. Meanwhile, the Average Directional Index (ADX) has climbed to 31.55, its highest reading since August 2024, confirming that the downward momentum is strengthening. The path of least resistance remains lower, with the next key target around $25.
However, a decisive move above the $52.53 resistance level would invalidate the bearish thesis and could open the door to a rally toward $100. For now, the technical setup favors the bears.
Turnaround concerns weigh on sentiment
Nike's troubles stem from strategic decisions made years ago, including a heavy pivot to direct-to-consumer sales that alienated wholesale partners. Under CEO Elliot Hill, the company has launched a "Win Now" plan aimed at clearing inventory, revitalizing its sports business, rebuilding wholesale relationships, and boosting product innovation.
Yet, the market is skeptical about the speed of this turnaround. The latest quarterly results showed revenue of $11 billion, with the Nike brand flat on a reported currency basis. Wholesale revenue did rise 4%, and gross margins improved to 49.2%—a gain of 890 basis points—largely due to tariff refunds totaling approximately $986 million. But these numbers have not reassured investors.
Looking ahead, analysts expect revenue to decline by 2.9% in the upcoming quarter to $11.38 billion, with annual revenue projected to fall another 1.57%. Buying Nike stock now is essentially a bet that management can execute its turnaround effectively.
Analyst sentiment turns bearish
Wall Street is growing increasingly cautious. JPMorgan's Matthew Boss downgraded the stock from neutral to underweight, cutting his price target from $47 to $40. Rothschild and BNP Paribas have also issued sell and underperform ratings, respectively. This wave of downgrades adds to the negative sentiment surrounding the stock.
For investors, the question remains whether the current price offers a value opportunity or a value trap. The technical indicators suggest that the selling pressure is not yet exhausted, and the fundamental challenges are far from resolved. As seen in other beaten-down stocks, catching a falling knife can be risky, but those who wait for confirmation of a bottom may miss the initial rebound.
In the broader market context, investors are also weighing the impact of AI-driven demand and policy shifts on various sectors, but Nike's issues are company-specific. The company's ability to regain its footing will depend on its execution over the coming quarters.
While some may see the steep decline as a potential buying opportunity, the lack of a clear catalyst and the persistent bearish technicals suggest that the "sell the rip" camp may have the upper hand for now. Investors should monitor key support and resistance levels, as well as any updates on the turnaround plan.
This article is for informational purposes only and does not constitute financial advice.
