What To Know About Nike's (NYSE: NKE) Earnings Report

Nike's (NYSE: NKE) latest earnings report has sparked significant concern among investors, leading to a dramatic 20% drop in one day during pre-market trading. This steep decline comes amid a mixed earnings report highlighting Nike's strengths and challenges.

What Does The Report Say About Nike?

Nike reported Q4 2024 revenue of $12.60 billion, falling short of analysts' expectations of $12.86 billion. However, the company reported an EPS of $1.01, surpassing the consensus estimate of $0.85. Despite this earnings beat, Nike's stock fell 12% immediately after the announcement. It continued to drop over the following days, resulting in a 22% decline over five days to a pre-market price of $75.79. This sharp decline underscores investor concerns about Nike's ongoing struggles in key markets like China and Europe, where digital and wholesale segments have underperformed.

A Breakdown in Progress?

Nike's shares have been trading within a rising wedge pattern, a bearish signal that suggests more downside risk. Analysts had projected a potential drop to $75, a level already breached in pre-market trading. Investors are closely watching for further declines, with the stock now trading around $75.79. The support level around $82, based on a swing low from October 2022, has already been surpassed, indicating significant downward pressure.

Market Sentiment and Future Outlook

Nike's earnings report also reflects broader market concerns. The company has revised its sales outlook downward, projecting a low-single-digit revenue decline for the first half of fiscal 2025. This cautious guidance is driven by persistent challenges in major markets and a strategic pivot towards innovation.

Analysts from Stifel have downgraded Nike's stock, pointing to ongoing downward revisions of financial estimates and delaying growth prospects further into 2025. 

What to Watch

Investors can monitor these key factors following Nike's earnings report:

• Support Levels: With the $82 support level breached, the focus is now on how long the stock will stay around the $75 mark and whether it will dip further.
• Product Launches and Events: The upcoming Summer Olympics and new product innovations could boost short-term sales.
• Market Reactions: Pay close attention to how the market responds to Nike's strategic shifts and any updates in guidance.

While Nike exceeded EPS expectations, the revenue miss and cautious outlook have raised significant concerns. The drastic 20% drop in share price highlights investor anxiety, and technical indicators suggest potential further downside.

Neither Sean Kelland nor Stocks.News have positions in this company.