Nike posted its quarterly earnings report today, delivering a measure of relief to investors concerned after a somewhat turbulent year for the athletic wear company.
After hours trading showed a quick bump and grind in the share price, ending after hours trading (which ends at 8PM ET) on a high note of $67.53, after a daily low of $66.53. Overall the closeout trading was only just under $7 over the 52-week low of $60.13. Today’s results are probably still not impressive to those who bought at the beginning of the week, when the price was still above $70 per share.
Closing on an upward swing could either bring on selling from regular market traders or it could continue the momentum tomorrow.
Nike’s earnings report speaks to the concerns that many have had regarding fierce competition brought on by rivals like Adidas and Under Armour, both of which have similar concerns to Nike as regard the ongoing flirtations with a trade war and protectionist policies in Washington.
Nike has decided to combat the confluence of malevolent factors by getting back to its roots – sales, sales, sales. The report quotes CFO Andy Campion as saying:
Amidst an increasingly dynamic macro environment, what is certain is that NIKE’s execution of the Consumer Direct Offense is driving consistently strong grow th across our diverse, global portfolio. As we continue to invest in digital transformation, we are driving consumer-centric disruption in our industry and unlocking new opportunities for growth.
US-China Relations A Huge Factor In Nike Investor Confidence
Note that Campion uses the word “dynamic” where “toxic” would have worked just as well. Relations with China continue to deteriorate with the DOJ today announcing the arrest of hackers accused of stealing American intellectual property.
Zhu Hua & Zhang Shilong, two members of a hacking group operating in China known as the APT 10 Group, are #wanted by the FBI for conspiracy to commit computer intrusion, conspiracy to commit wire fraud, & aggravated identity theft. Contact the FBI w/ info. https://t.co/VAnzlNfR4F pic.twitter.com/7MxcrA8jKi
— FBI (@FBI) December 20, 2018
Other actions relating to China and Chinese entities are ongoing and daily. Both sides seem to be pulling out all the stops. All of which puts increasing pressure on companies like Nike, who do the majority of their manufacturing in China. It also increases the likelihood that they will have an even more interesting third quarter.
From time to time the results of the period from 4:30PM to 8PM or so is not indicative of the following day’s performance. On December 3rd, for example, after hours trading drove Nike to 78.10 but the following day saw it hit a low of more than a dollar away from that. After hours trading on December 4th saw it lose another few dollars, evening out around $74 before it began the process of getting to where it is now.
If that pattern repeats itself and the news of a sound earnings report with figuratively decent earnings doesn’t impress investors – who may feel the negativity of potential tariffs on Chinese imports could impact Nike’s business too extremely – then Nike could be looking at a new 52-week low within the next week.
Featured image from Shutterstock. Campion photo from LinkedIn.