Nike Stock Dips on Earnings: Analysts Weigh in on What’s Next

Key Points

• Nike stock has gone on another leg lower after reporting earnings, leading investors to wonder whether they should buy or sell the stock after the reaction.
• Fundamental data suggests that the market has oversold the stock, creating a potential recovery rally. 
• Wall Street analysts and institutional buyers see Nike going on a rebound in the coming months.

It’s not often that investors can find a company that’s just over $100 billion in market capitalization, not to mention owning a brand that is globally recognized as premium and commoditized, trading near its yearly low prices. This is why shares of Nike Inc. NYSE: NKE have come to be as interesting as any other in the market, especially within the retail sector, despite what the recent data may suggest about the space.

Considering that the stock has been shot down after its recent quarterly earnings results, investors may be wondering whether it is now time to forget about this brand and its promise for a recovery rally, or if there’s a chance that it might ever return to its former glory and reclaim its place as one of the strongest international brands in the sportswear market today.

There are signs that make both of these angles true, but here is where putting on the trader shoes could be beneficial, as well as considering the normality in historical figures for this company, where comparing these to today’s reports might seem like a no-brainer to step into Nike for a potential swing higher. All of these and other factors will become clear today; the homework has been done so that investors don’t have to wonder about Nike’s future any longer.

What’s Behind Nike’s Sell-Off

Now that Nike trades at only 68% of its 52-week high level, some bears might be celebrating that their short positions will sit deep in the green for now. However, when investors zoom out on the chart, they’ll notice that the company is now trading at the same price as when the COVID-19 pandemic was in full swing.

This essentially means that the market right now is pricing in Nike stock as if the entire global economy is back on lockdown, where consumers will not be spending at all. Half of that is true, as consumer data has been cooling for the quarter, triggering some institutional investors to pull out of consumer discretionary stocks, including Nike.

However, the company’s quarter's decline isn’t as bad as the market is now pricing in. The latest quarterly figures show a net revenue decline of 9% over the year, mainly driven by slowdowns in the footwear segment, particularly in the Chinese market.

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Understanding that China’s economy is starting to pick back up could be a sign of potential optimism, but that’s the least of the recovery scenarios to consider today. The simple fact is that Nike’s COVID-19 price today might lead the stock to fall into completely oversold territory, a theme that some buyers have decided to act upon in recent months.

Optimism Might Be Back for Nike Stock

Over the past quarter, as much as $6.3 billion in institutional capital has made its way into Nike stock as a vote of confidence for backing this company at the recent lows. Leading the way in this recent buying were those from Prostatis Group, who decided to boost their holdings in Nike stock by as much as 29.9% as of March 2025, bringing their net position to $1 million today.

While not the most sizeable position for the stock, it still signifies an optimistic sign of confidence in its future. Even if this optimism takes a bit longer to be realized than most investors would like, the company is still able to offer a $1.6 per share dividend payout.

At today’s low price, this payout would translate into an annualized dividend yield of up to 2.4% to keep up with inflation in the United States, making this the highest yield in over nine years. This is a testament to the stock’s potential undervaluation in today’s environment.

More than that, investors can see that the consensus price target is still set at a high of $87.4 per share today, implying that Nike stock can still rally by as much as 30% from its recent low. Despite the recent bearish price action, this willingness to remain optimistic about Nike stock should not be ignored by investors today.

With this in mind, one famous investor in the market is still backing Nike stock through its recent decline. Bill Ackman has been invested in Nike since the fourth quarter of 2024, and there haven’t been any signs of the investor pulling back from his position during the recent declines.

Last but not least, the recent institutional buyers in Nike were willing to pay a premium price above the rest of the peer group. This might mean a high conviction behind the thesis that the company will go higher in the coming months or quarters.

Nike’s price-to-earnings (P/E) ratio of 20.7x today commands a steep premium above the rest of the discretionary sector and its 17.1x average valuation multiple. Rather than calling this expensive, seasoned investors will reiterate the fact that the market always has a good reason for overpaying for certain stocks, as they expect much better performance in the future.