2024

Industrial

Adidas

<h3 id="key-takeaways">Key Takeaways</h3>
<ul>
 <li>On September 21, Nike will exit the S&amp;P 100 following an 80% market capitalization collapse over five years, now valued at approximately $53 billion.</li>
 <li>Trading near $36, Nike represents the Dow Jones Industrial Average’s least expensive and most negligible component, accounting for merely 0.4% of the index.</li>
 <li>Goldman Sachs leads the Dow with shares around $968, approximately 27 times Nike’s current valuation.</li>
 <li>Wall Street sentiment remains pessimistic before Nike’s October 1 financial results, with UBS projecting consensus misses and disappointing Q2 projections.</li>
 <li>Revenue is expected to decline year-over-year for both the present quarter and the fiscal period concluding in November.</li>
</ul>
<a href="https://www.barrons.com/articles/nike-djia-stock-b12ecac5?mod=RTA" rel="noopener noreferrer nofollow">Nike (NKE)</a> currently hovers around $36 per share, and this low valuation is creating significant concerns about its continued membership in the Dow Jones Industrial Average.
<a href="https://knockoutstocks.com/stock/NKE" rel="noopener noreferrer nofollow"> <img src="https://knockoutstocks.com/api/stocks/NKE/embed" alt="NKE Stock Card"> NIKE, Inc., NKE </a>
S&amp;P Dow Jones Indices announced Nike’s forthcoming removal from the S&amp;P 100 index effective September 21 before market opening, pointing to the company’s market capitalization decline of approximately 80% across the previous five years to roughly $53 billion. This development has sparked widespread speculation about whether a Dow exit could follow.
Because the Dow operates on a price-weighted methodology, stocks trading at lower prices exert diminished influence. Nike currently commands only 0.4% of the index’s total weighting, making it the smallest among all 30 constituents. Coca-Cola holds the second-smallest position, trading near $88 with a 1% weighting.
Goldman Sachs dominates the index with shares trading around $968—approximately 27 times Nike’s current price point, a disparity the Dow’s Averages Committee reportedly tracks closely.
Since joining the Dow in 2013, Nike’s shares have climbed a mere 5%, while the S&amp;P 500 has surged more than fourfold during the same timeframe.
The Dow lacks predetermined removal criteria. The Averages Committee—comprising three representatives from S&amp;P Dow Jones Indices and two from the Wall Street Journal—implements changes when deemed necessary. All deliberations remain confidential.
However, a Reuters examination of the past decade’s 10 Dow modifications since 2013 revealed that at minimum half involved eliminating the component with the smallest weighting at that moment.
<blockquote>
 “When you examine the historical pattern, it’s definitely positioned as a removal candidate,” stated Josh Bischoff, partner and head trader at TimesSquare Capital Management.
</blockquote>
<h3 id="pessimistic-earnings-expectations">Pessimistic Earnings Expectations</h3>
Analyst sentiment toward Nike continues deteriorating ahead of its October 1 earnings announcement. Among analysts tracking the stock, 26 assign it a Hold rating and five designate it a Sell, versus only 12 Buy recommendations, per FactSet data.
UBS analyst Jay Sole noted this week that <a href="https://knockoutstocks.com/stock/NKE" rel="noopener noreferrer nofollow">Nike’s</a> worldwide sales momentum has “worsened during the past three months.” He anticipates earnings will fall short of consensus projections and the Q2 guidance will significantly undershoot current market expectations.
<blockquote>
 “While sentiment is negative, our investor discussions indicate the market is underestimating how substantial the downward EPS adjustments will be,” Sole stated.
</blockquote>
Wall Street projects year-over-year revenue contractions for both the ongoing quarter and the fiscal period ending in November.
<h3 id="industry-wide-challenges">Industry-Wide Challenges</h3>
Nike isn’t experiencing these difficulties in isolation. Adidas has declined over 15% year-to-date, while HOKA parent company Deckers Outdoor has tumbled 25%, and On Holding has plummeted nearly 45%.
Disappointing financial results from Dick’s Sporting Goods, which also operates Foot Locker, highlighted the challenging environment pervading the athletic footwear retail sector.
A silver lining: Nike’s dividend yield stands at 4.6%, representing the Dow’s highest, providing some attraction for income-oriented shareholders.
CEO Elliott Hill, who returned to the organization in 2024 to spearhead a strategic revival, recognized during a June earnings discussion that Nike is managing a “more complicated macroeconomic landscape” featuring heightened constraints on consumer expenditure.
Nike refused to provide commentary regarding potential Dow removal speculation.
The post <a href="https://blockonomi.com/is-nike-nke-about-to-lose-its-dow-jones-membership/" rel="noopener noreferrer nofollow">Is Nike (NKE) About to Lose Its Dow Jones Membership?</a> appeared first on <a href="https://blockonomi.com" rel="noopener noreferrer nofollow">Blockonomi</a>.

Is Nike (NKE) About to Lose Its Dow Jones Membership?

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