Nike: Between Crisis and Recovery Opportunity – A Look at the Future of the Sports Giant

Nike, a prime example of a so-called blue-chip stock, symbolizes stability and global brand recognition. However, even an industry leader is not immune to periods of volatility. In recent years, the sportswear manufacturer has experienced a downturn. Since its peak in November 2021, Nike's stock has lost around 55% of its value, with a 24% decline in 2024 alone. This development has caused frustration among investors but also holds potential for long-term investors who are patient. A significant leadership change is imminent: On October 14, CEO John Donahoe will be replaced by Elliott Hill. Donahoe, who took the helm in 2020, faced challenges partly due to a focus on online sales. In contrast, Elliott Hill brings extensive experience in corporate culture—a benefit for a fresh start on the path to innovation. Nike's current valuation, with a price-earnings ratio of 23.1, appears fair compared to the industry, even though competitors like Adidas, On Holding, Deckers Outdoor, and Lululemon have recently grown more. The strength of the Nike brand remains an invaluable asset, as Warren Buffett would describe: "It's better to buy a wonderful company at a fair price than a fair company at a wonderful price." Despite recent setbacks, Nike is likely to continue its strong track record. Management is taking advantage of the price decline for share buybacks, reducing the number of outstanding shares and thus increasing earnings per share. This signals confidence in an imminent turnaround. The road to recovery will be long, but the current level could be an attractive entry point for long-term-oriented investors.