Nike Stock Suffers as Chinese Growth Dwindles

Options traders and analysts are shifting their NKE stance

Deputy Editor
Mar 22, 2024 at 10:18 AM
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Nike Inc (NYSE:NKE) stock is down 7.4% to trade at $93.40, the worst Dow stock today by far, in the wake of the blue-chip apparel retailer's fiscal third-quarter quarterly report. Though Nike reported better-than-expected earnings and revenue thanks to sales and prices changes in North America, its shares are being dragged down by slowing growth in China.  

No less than 12 analysts cut their price targets; RBC slashed its objective to $100 from $110 and also cut its rating to "sector perform" from "outperform." The average 12-month target price of $113.53 is a 23% premium to current levels and 19 of 30 covering brokerages rate NKE a "buy" or better, so  more downgrades and/or price-target cuts could weigh on the equity.

Nike stock is trading at its lowest level since September 2023, on track to snap a three-day win streak and heading for its worst weekly loss since December. Thanks to today's drawdown and a Dec. 22 post-earnings bear gap of 11.8%, NKE is 23.7% lower year-over-year. 

Options volume is today running at 14 times the usual amount, with 64,000 puts and 33,000 calls exchanged so far. The most popular contract is the 3/22 97-strike put, followed by the 98-strike put in the same weekly series.

A broader look shows the penchant for bearish bets is nothing new. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 1.46 stands higher than 96% of readings from the last 12 months.

 

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