Nike Stock Price Sinks 15% on Weak Q3 Earnings as Dow Jones Drops 4%
Nike share price has taken a dive due to tariffs, while major indices also endured heavy losses, with Dow Jones closing 4% lower.
U.S. stock markets suffered a sharp selloff on Thursday as investors reacted to the latest round of tariffs announced by the White House. Concerns over the potential economic impact led to significant losses, with the Dow Jones Industrial Average dropping 1,679 points, a nearly 4% decline, closing at 40,546. This marked a break below key support at 40,600, pushing the index toward its next crucial level at 40,000.
The S&P 500 also faced its worst single-day drop since the 2020 COVID-19 market crash, plunging 274 points (-4.8%), erasing nearly $2 trillion in market value, according to FactSet. While not all companies are directly affected by the new tariffs, markets are beginning to price in the risk of a recession. The non-farm payroll report on Friday and Federal Reserve Chair Jerome Powell’s speech could determine whether further downside movement is ahead.
Nike Faces Sharp Losses Amid Market Selloff
Among the hardest-hit stocks was Nike (NKE), which suffered a 15% decline, making it the worst-performing stock in the Dow Jones index. Nike’s stock collapse was driven by the high tariffs imposed on Vietnam, where the company manufactures a significant portion of its products. As a result, production costs are expected to surge, further pressuring Nike’s bottom line.
Adding to the stock’s struggles, Nike reported disappointing Q3 2024 earnings, revealing steep declines across key financial metrics.
Nike Q3 2024 Financial Highlights
Revenue fell 9% year-over-year to $11.27 billion, impacted by weaker sales in China, Europe, the Middle East, Africa, and North America.
Gross profit dropped 16% to $4.67 billion, with margins declining 330 basis points to 41.5% due to lower average selling prices and increased discounting.
Pre-tax income declined 40% to $844 million, driven by falling revenues and shrinking margins.
Net income fell 32% to $794 million, reflecting reduced profitability.
Earnings per share (EPS) dropped 30% to $0.54, as lower revenues and margins weighed heavily on overall performance.
With mounting economic uncertainty and the impact of tariffs on global supply chains, investors remain wary of Nike’s future earnings potential. The company now faces increased pressure to adjust its manufacturing strategy or pass rising costs onto consumers, both of which could further challenge its growth trajectory.
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