Nike has been beaten down and dropped from the S&P 100; the author has opened a position. Fashion trends are cyclical, so Nike’s current unpopularity could reverse, creating an asymmetric opportunity. Long NKE offers upside potential if the brand reasserts its cultural relevance over the next several years. Brand stays out of favor longer than expected; competitors capture trend momentum; fundamentals keep deteriorating.
Nike has been beaten down and dropped from the S&P 100; the author has opened a position. Fashion trends are cyclical, so Nike’s current unpopularity could reverse, creating an asymmetric opportunity. Long NKE offers upside potential if the brand reasserts its cultural relevance over the next several years. Brand stays out of favor longer than expected; competitors capture trend momentum; fundamentals keep deteriorating.