TLDR
- Nike is being removed from the S&P 100 on September 21 after an 80% slump in market value, now sitting at around $53 billion.
- At around $36, Nike is the lowest-priced and lowest-weighted stock in the Dow Jones Industrial Average, making up just 0.4% of the index.
- Goldman Sachs, the Dow’s top-weighted stock, trades around $968, roughly 27 times Nike’s price.
- Analysts are bearish ahead of Nike’s October 1 earnings, with UBS warning results will likely miss consensus and Q2 guidance will disappoint.
- Year-over-year sales are forecast to drop for both the current quarter and the fiscal quarter ending November.
Nike (NKE) is trading around $36, and that number is becoming a real problem for its place in the Dow Jones Industrial Average.
S&P Dow Jones Indices confirmed it will remove Nike from the S&P 100 index before trading opens on September 21, citing the company’s market value, which has fallen roughly 80% over the past five years to around $53 billion. The move has investors questioning whether the Dow is next.
The Dow is price-weighted, meaning lower-priced stocks carry less influence. Nike now holds just 0.4% of the index’s overall weighting, the smallest of all 30 components. Coca-Cola is the second smallest, trading around $88 with a 1% weighting.
Goldman Sachs, the index’s top dog, trades around $968. That’s about 27 times Nike’s price, a gap the Dow’s Averages Committee is known to monitor.
Nike has been a Dow member since 2013. Over that time, its stock has risen just 5%, while the S&P 500 has more than quadrupled.
The Dow does not have automatic deletion rules. Changes are made on an “as-needed basis” by the Averages Committee, made up of three S&P Dow Jones Indices representatives and two from the Wall Street Journal. All discussions are confidential.
Still, a Reuters analysis of the last 10 Dow changes since 2013 found that at least half involved removing the stock with the smallest weighting at the time.
“Just looking at it historically, it probably is a candidate for removal,” said Josh Bischoff, partner and head trader at TimesSquare Capital Management.
Bearish Earnings Outlook
Wall Street’s mood on Nike is not improving ahead of its October 1 earnings report. Of analysts covering the stock, 26 rate it a Hold and five have it a Sell, compared with just 12 Buy ratings, according to FactSet.
UBS analyst Jay Sole wrote this week that Nike’s global sales growth trend has “deteriorated over the last 3 months.” He expects earnings to miss consensus and the Q2 outlook to come in well below current estimates.
“Sentiment is bearish, yet our conversations with investors suggest the market underestimates the magnitude of the downward EPS revisions,” Sole wrote.
Analysts forecast year-over-year sales declines for both the current quarter and the one ending in November.
Struggling Sector
Nike is not alone in its struggles. Adidas is down more than 15% this year, HOKA owner Deckers Outdoor has fallen 25%, and On Holding has dropped nearly 45%.
Weak earnings from Dick’s Sporting Goods, which also owns Foot Locker, underlined how tough conditions are across the sneaker retail space.
One bright spot: Nike’s dividend yield sits at 4.6%, the highest in the Dow, which offers some appeal to income-focused investors.
CEO Elliott Hill, who rejoined the company in 2024 to lead a turnaround, acknowledged during a June earnings call that Nike is navigating a “more complex macro environment” with increased pressure on consumer spending.
Nike declined to comment on the possibility of Dow removal.
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