Investors who held Nike (NKE) for the last decade did not earn a profit. Nike shares fell by 15% last week after the apparel maker posted weak third-quarter results. What happened, and who is the next firm that will drop by that much?
Nike reported a 0.1% growth in revenue, to $11.28 billion. Direct sales dropped by 4%, to $4.5 billion. Weak D2C sales suggest that Nike does not have a business model that competes effectively with the e-commerce companies. Still, Amazon (AMZN), Coupang (CPNG), Sea Ltd. (SE), and MercadoLibre (MELI) shares are performing poorly as well.
Consumers must cut their spending amid the oil shock. After Iran and the U.S. bombed Iran, Iran closed shipping traffic through the Strait of Hormuz. This might cause demand for apparel to fall this quarter. Watch out for Lululemon (LULU) trading at new lows.
ON Holdings (ON) and Adidas (ADDYY) will continue their downtrend. Deckers (DECK), however, is range-bound, since it has strong profitability.
The consumer spending drop might spread to the entertainment sector. Disney (DIS) is in a one-year downtrend, even though the stock bounced back recently. Watch out for Paramount Skydance (PSKY), Comcast (CMCSA), and Warner Bros. Discovery (WBD) re-testing 1-year lows if the market sell-off broadens.
