Where did Nike stumble?

Just a year ago, Nike was the third-most valuable apparel brand in the world, and on September 21, it will be removed from the S&P 100 after almost 18 years in the index, while remaining in the S&P 500 index. 

What happened?

S&P Dow Jones Indices hasn’t said Nike is being removed specifically because of its falling stock price, but given the index’s focus on market-cap ranges, the roughly 80% plunge from its November 2021 peak appears to be the main reason. 

And it’s not just about investors moving into tech. Nike has faced more fundamental problems, starting with its 2020 business overhaul under a new CEO, when it laid off hundreds of experts who had spent decades studying what runners and football players actually need, doubled down on direct-to-consumer sales through Nike.com, and cut ties with hundreds of wholesale partners worldwide. 

The CEO was eventually replaced, and Nike is now rebuilding those wholesale relationships, but the damage was already done.

The company is also facing tougher competition from both global and local brands. Last but not least, China has been another major headache, with cautious consumers, a property crisis, higher savings, and a shift toward domestic brands, along with the Xinjiang boycott.

Trade wars and the ongoing Middle East crisis are only adding to the pressure.

What’s next for Nike?

Nike reported around $46.4 billion in revenue for fiscal 2026, roughly flat in reported terms and down about 2% on a constant-currency basis. So on the surface, things don’t look that bad, but without a turnaround in China and a broader cleanup of the business, the outlook remains murky, as do analyst recommendations. 

Overall, Nike is a good reminder that a stock looking cheap doesn’t necessarily mean it’s a bargain. Usually, there’s a reason the market is pricing it that way. That doesn’t mean you should go for stocks that are already extremely expensive and hope for huge gains either, as they can be driven more by speculation than fundamentals. 

Now, if you don’t have the time or desire to analyze companies one by one, passive investing can be an option, though it’s worth keeping in mind the fees and that lower risk usually means lower potential returns.