Nike Defies Gravity: Stock Soars Amid $1B Tariff Storm and Q4 Sales Plunge
Wall Street shrugs off economic headwinds as the Swoosh flexes its brand muscle.
Tariff turbulence? Not in this dojo
While analysts predicted a knockout blow from new import taxes, Nike's share price pulled off an unexpected vault—proving again that cult brands trade on different fundamentals.
The China factor
That 14% Q4 revenue drop in Greater China? Apparently just a warm-up stretch for the bulls. Either that, or the market's betting heavy on Beijing's stimulus package doing the heavy lifting.
Footwear as a hedge
In a world where central banks print trillions and tariffs become political poker chips, maybe Air Jordans really are the new gold standard. Or maybe this is just another case of TINA (There Is No Alternative) meets FOMO.
Closing thought: When even a billion-dollar tariff warning can't deflate the bubble, you know we're deep into speculative territory. But hey—at least these assets come with laces.
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Nike is pursuing its largest turnaround strategy under new CEO Elliott Hill, who took the helm in October last year. Commenting on the results during the earnings call, Hill stated, “From here, we expect our business results to improve.” These positive expectations may have prompted the rally in Nike shares.
Nike Is Planning to Reduce Reliance on China
The company stated that currently about 16% of Nike’s supply chain is in China, and it plans to reduce that figure to a “high single-digit percentage” by the end of fiscal 2026, which concludes in May. Nike will shift some production to other countries to reduce the tariff impact. The financial impact to Nike’s FY26 gross margins is projected at approximately 0.75 percentage points, with the greatest effect expected in the first half of the fiscal year.
Nike CFO Matt Friend said during the call that despite heightened tariff exposure, China remains an important sourcing base for the company. Friend also stated that Nike will optimize its sourcing strategy and “allocate production differently across countries to mitigate the new cost headwind into the United States.” Additionally, Nike will evaluate corporate cost reductions to offset rising costs. The company is determined to fully mitigate the impact of these tariffs over time.
For Q1FY26, Nike expects sales to fall by a mid-single-digit percentage, in line with the consensus forecast of a 7% decline. The company is also working to win back wholesale partners, marking a shift from its previous strategy of selling more directly to customers. Moreover, Nike is relaunching its products on e-commerce giant Amazon.com (AMZN) beginning this fall. The company has already announced price increases on some trainers and clothing in the U.S. to help offset rising costs.
Is Nike a Good Stock to Buy Right Now?
On TipRanks, NKE stock has a Moderate Buy consensus rating based on 13 Buys and 12 Hold ratings. The average Nike price target of $71.48 implies 14.3% upside potential from current levels. Year-to-date, NKE stock has lost 16.4%.
