By Bryan Bottarelli, Trade of the Day, 2024-07-08
In case you haven't heard, it's been a rough summer for Nike (NKE).
Shares are down -20% just in the month of June…
Which was triggered by a majorly disappointing earnings report.
Specifically…
Nike experienced a -18% revenue drop for their Converse brand – combined with an -8% slide in their Nike Direct e-commerce sales.
To make matters worse, things were not any stronger in China – which added up to a 10% revenue drop across the entire company.
Here's how the stock reacted…
I admit: This was a surprising result.
However, the massive June swoon could lead to opportunity.
Here's why…
First and foremost, Nike is an athletic apparel giant who is known around the world. And right now, unlike most stocks trading near their highs, Nike is cheap. Very cheap.
Nike has a current market cap around $113 billion – and they generated revenue of over $51 billion in fiscal 2024. This means that Nike stock trades at a price-to-sales (P/S) ratio of a little more than 2 – which makes it the cheapest the stock has been by that metric in more than a decade.
In other words…
Nike‘s stock now trades at prices not seen since the early COVID-19 crash in March of 2020.
You're probably wondering…
Are there any upcoming trigger catalysts that could ignite the stock?
Yes.
First, we have the Paris Olympics.
After that, Nike‘s revitalized product lineup should be ready to roll alongside the 2026 World Cup.
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