Nike (NYSE:NKE) stock took a tumble last week after Duke college basketball star Zion Williamson’s Nike PG2.5 shoe tore apart in the first minute of a game against rival North Carolina. Nike spent $11.5 billion on marketing and endorsement contracts in 2018. The incident attracted significant attention in mainstream and social media, but the stock has bounced back over the past week.
Nike is expected to release its fiscal 2019 third-quarter results in March.
In the second quarter, the company reported revenue of $9.4 billion which was a 10% increase from the prior year. Net income rose 10% to $847 million on the back of strong revenue growth and gross margin expansion.
Nike has continued to benefit from a lower tax rate due to the US Tax Cuts and Jobs Act which was enacted in December 2017.
The company has reported strong demand over the past year. Inventories for Nike were reported at $5.4 billion at the end of the second quarter, which was a 1% increase from Q2 fiscal 2018.
Cash and equivalents and short-term investments fell $2.3 billion year-over-year as Nike has splurged on its share repurchase plan. During the second quarter the company repurchased a total of 16.1 million shares for approximately $1.6 billion.
The Nike brand has looked strong over the past year, but the stock is priced high in late February. Shares had an RSI of 66 as of close on February 25, which puts the stock near overbought territory as of this writing.
