Nike Plummets 80%, Facing S&P 100 Exclusion

Nike, the 80% Fall and S&P 100 Exclusion

How could Nike lose nearly 80% of its value on the stock market and be one step away from expulsion from one of the most watched indices? The answer is not singular, but the data is overwhelming: the company, a symbol of sport for decades, faces removal from S&P 100 after almost 18 years. According to information leaked, the stock has dropped 80% from its 2021 peak. The announcement has been met with a mix of satisfaction and skepticism, especially among those who see Nike as the perfect example of a brand that has lost its way.

The Causes: Proge, Competition, and Strategy

The most repeated explanation is the company's "proge" shift. Nike embraced inclusive and DEI (Diversity, Equity, and Inclusion) campaigns that, according to some analyses, alienated its customer base. This is not an outlandish theory: a similar phenomenon has been observed in companies like Boeing. However, some argue that the problem is not ideological but managerial. The brand abandoned its core athletic focus to delve into "urban style," leaving space for Adidas, Puma, and especially Lululemon, which captured the leggings and yoga wear market. Furthermore, Nike closed physical stores in shopping centers to move into smaller spaces within department stores, betting on the online channel as its only path forward. In retrospect, the strategy has failed.

Quality and Price: The Fatal Cocktail

Another recurring factor is the decline in quality. Those who have run with the brand for years recall models like Nike Vomero or Pegasus fondly: good soles, excellent cushioning, durable materials. But the latest deliveries, according to runners' circles, do not measure up. Meanwhile, pricing has only gone up: prices for shoes range from 200 to 400 euros, with Air Jordan line models exceeding 1,000 euros on the resale market. A consumer paying 150 euros for a pair of trainers expects an exceptional product; if they find questionable quality, their next purchase will go elsewhere. And rightly so, the market has seen alternatives like Brooks, Saucony, and Joma flourish.

The Immediate Future

The expulsion from S&P 100, effective September 21st, does not miccionan bankruptcy. Nike remains a revenue giant, and its brand holds invaluable worth. But investors have suffered: an -80% drop is a serious blow, as market jargon might say. The question remains whether the company knows how to react. The precedent set by Victoria's Secret, which returned to traditional sizing in its parades and saw its stock rise 30%, suggests that the market rewards common sense. We will see if Nike learns this lesson or continues, like other Western companies, trying to sell a product nobody wants.