Nike Falls Most Since October, Trimming Its Post-Earnings Surge
(Bloomberg) -- Nike Inc. shares fell the most in more than two months, erasing much of the gain that followed strong earnings results last week.
The world’s biggest sports apparel and footwear company tumbled 5.9 percent to $68.10 in New York, the biggest loss since Oct. 10. The drop was likely a product of the current market, where investors are making emotional decisions in the wake of losses, and less about Nike specifically, according to Simeon Siegel, an analyst at Instinet LLC who recommends buying the stock. But it came a day after LeBron James, one of the company’s biggest stars, apologized for posting lyrics about “Jewish money” on his Instagram account.
“Investors are struggling because rationality is not driving stocks right now,” said Siegel. “The stock was up 7 percent or so the day before, which by extension means it has to be down today in this market.”
Nike posted second-quarter earnings that beat estimates on Friday, including strong sales growth in the company’s two most important markets: North America and China. It was company’s first earnings report since it featured controversial quarterback-turned-activist Colin Kaepernick in its newest “Just Do It” ad campaign.
James, the Los Angeles Lakers star, apologized on Sunday for posting lyrics from the song “ASMR” by hip-hop artist 21 Savage on Instagram as he rode in a vehicle.
“Apologies, for sure, if I offended anyone,” James told ESPN. “That’s not why I chose to share that lyric. I always (post lyrics). That’s what I do. I ride in my car, I listen to great music, and that was the byproduct of it. So I actually thought it was a compliment, and obviously it wasn’t through the lens of a lot of people. My apologies. It definitely was not the intent, obviously, to hurt anybody.”
There was no indication that the National Basketball Association has any plans to fine James for the remarks, according to ESPN. Nike didn’t respond to a request for comment.
“We did see some controversy over LeBron’s posts over the weekend which could create some headline risks,” said Chen Grazutis, a Bloomberg Intelligence analyst. “He’s obviously a big asset for Nike both directly through merchandise sales and on the brand marketing side. That said, I am not sure as to how much that would have an effect on the stock today.”
Nike also made leadership changes last week. On Friday the company said Coca-Cola Co. executive G. Scott Uzzell will become the next chief executive officer of its Converse brand. Uzzell will replace Davide Grasso, who is retiring at the end of the year.
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