Nike Inc. (NKE) shares dropped 4.8% to $43.73 on Tuesday, closing in on their 52-week low as Wall Street grows increasingly skeptical of CEO Elliott Hill's turnaround strategy. Trading volume surged to over 28 million shares, well above the daily average, as the stock hovered just above its $41.35 low from the past year.
The selling pressure comes less than a month before Nike's fiscal fourth-quarter earnings report, scheduled for release after the market close on June 30. That report is expected to be a pivotal moment for the company, with management set to address questions about demand trends, performance in China, and profit margins.
Nike's decline stood in sharp contrast to the broader market, which held steady. The SPDR S&P 500 ETF (SPY) ticked 0.1% higher in late trading, underscoring the stock-specific nature of the selloff.
Investor concerns have been mounting since Nike's fiscal third-quarter results failed to reassure. Revenue came in at $11.3 billion, flat year-over-year, while Nike Direct sales slipped 4%. Gross margin contracted to 40.2%, down 130 basis points, which the company attributed to higher tariffs in North America.
During the third-quarter earnings call, Hill acknowledged that the "pace of progress is different across the portfolio," though he insisted the "direction is clear." CFO Matthew Friend took a more cautious tone, warning that Nike's "Win Now" initiatives would continue to impact results for the remainder of the fiscal year.
Friend's guidance for the fourth quarter proved particularly alarming. He projected a sales decline of 2% to 4%, defying Wall Street expectations for growth. Even more starkly, he forecast a 20% drop in sales in Greater China, a key growth market that has become a major headwind.
"A dent to American consumer confidence would blunt Nike's recovery efforts," M Science analyst Drake MacFarlane told Reuters, highlighting the broader economic risks facing the company.
Competition continues to intensify. According to Reuters, Nike's global sports-footwear market share slipped 3 percentage points to 22.9% in 2025, marking the third consecutive year of decline. Rivals such as Adidas have gained ground, while fast-growing brands like On and Deckers' Hoka have maintained pressure in the running category.
Short interest has climbed to 4.67% of Nike's outstanding shares as of May 1, reflecting bearish sentiment. Morningstar analyst David Swartz told Reuters, "We have been talking about the same problems since Hill came in," adding that investors were expecting faster action.
The June 30 earnings report could serve as a catalyst for either a short squeeze or further downside. If inventory improves, North America stabilizes, and margins recover later this year, bears may be forced to cover. However, continued softness in China, sluggish Nike Digital performance, or renewed tariff pressures could push the stock back toward its 52-week low.
Russ Mould, investment director at AJ Bell, summed up the mood after Nike's March warning: "If Nike's recovery is a marathon rather than a sprint, then the company seems to be hitting a wall." For now, investors are marking June 30 as the next critical checkpoint.
