Approximately $28 billion in shareholder wealth was wiped out
Factors contributing to the decline include softness in China, challenging foreign exchange headwinds, and problems under CEO John Donahoe's leadership
Nike experienced its worst day on record on June 28, 2024
Shares plummeted nearly 20%
In a major blow to Nike, the company experienced its worst day on record on Friday, with shares plummeting nearly 20% after it announced that it expected sales to decline in its new fiscal year. This marks the biggest one-day drop in Nike's history, wiping out approximately $28 billion in shareholder wealth. The decline was attributed to a variety of factors including softness in China, challenging foreign exchange headwinds, and problems created under CEO John Donahoe's leadership such as slow wholesale orders and pulling back on classic franchises. Nike's focus on its direct-selling strategy appears to have come at the expense of innovation, allowing competitors like On Running and Hoka to snatch up market share. The news sent shockwaves through Wall Street, with investors losing confidence in Nike's ability to maintain growth and profitability.
Nike CEO John Donahoe is facing loss of Wall Street's confidence after the company posted its slowest annual sales gain in 14 years, excluding the Covid-19 pandemic.
Nike finance chief Matt Friend attributed the guidance cut to factors like softness in China, challenging foreign exchange headwinds, and problems created under Donahoe's leadership such as slow wholesale orders and pulling back on classic franchises.
Competitors like On Running and Hoka have snatched up market share as Nike focused on its direct-selling strategy at the expense of innovation.
Accuracy
Nike's stock had the biggest one-day drop in company history on Friday, with a nearly 20% decline.
The decline wiped out approximately $28 billion in shareholder wealth.
Deception
(100%)
None Found At Time Of
Publication
Fallacies
(85%)
The article contains several instances of inflammatory rhetoric and appeals to authority. The author uses phrases such as “Nike CEO John Donahoe appears to be on thin ice” and “At least six investment banks downgraded Nike’s stock.” Additionally, the article quotes analysts at Morgan Stanley and Stifel who criticize Nike’s management. While there are no formal fallacies present, the inflammatory language and appeals to authority detract from the overall quality of the reporting.
Nike CEO John Donahoe appears to be on thin ice.
At least six investment banks downgraded Nike’s stock.
The FY25 guide (the 5th downward consensus revision in 6 quarters) pushes prospects for growth inflection further into 2025 (perhaps FY4Q or spring {25} at the earliest) asking investors to both underwrite success of not yet proven styles and look across an uncertain consumer discretionary backdrop into 2HCY24 until momentum could build again into 2HCY25.
Analysts at Morgan Stanley and Stifel took it a step further, specifically calling the company’s management into question.
Nike’s full-year revenue is expected to decline in the mid-single digits in the current fiscal year.
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Accuracy
Nike's full-year revenue is expected to decline in the mid-single digits in the current fiscal year.
Nike shares fell 18% on Friday morning, wiping out about $23 billion in market value.
Deception
(30%)
The article contains selective reporting as it only reports Nike's revenue decline and fails to mention the growth of its competitors. It also uses emotional manipulation by stating 'Nike is struggling to churn out hot-selling footwear' and 'the wave of competition from newer brands such as On Holding AG and Deckers Outdoor Corp.’s Hoka pushed Nike to vow to prioritize sports, new products and wholesale partners.' These statements create a negative emotional response towards Nike without providing any factual evidence.
Nike is struggling to churn out hot-selling footwear
The wave of competition from newer brands such as On Holding AG and Deckers Outdoor Corp.’s Hoka pushed Nike to vow to prioritize sports, new products and wholesale partners.
Fallacies
(85%)
The article contains several instances of appeals to authority and dichotomous depictions. The authors quote multiple analysts and their opinions on Nike's performance, making an appeal to their authority in the field. Additionally, they contrast Nike's current situation with that of Adidas, creating a dichotomy between the two companies.
Some analysts have criticized Donahoe’s leadership approach
That’s left Nike in a ‘push model’ situation
Adidas is now the ‘preferred sporting brand for global investors' as Nike and Lululemon lose momentum
