Prediction: This Is Where Nike's Stock Will Finish 2026
Key Points
Nike's stock recently hit a 12-year low, but that doesn't mean it can't go lower.
The company's turnaround isn't going well, and I think a drastic overhaul is needed.
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Nike (NYSE: NKE)'s stock keeps on hitting new lows and may end up falling to below $30 before the end of 2026. The company is in the midst of a turnaround that could conceivably take years to complete, and even then, it's not a guarantee to be successful. New CEO Elliott Hill took over nearly two years ago, and it's hard to say that the business is really going in the right direction.
Here's why I think Nike's stock is likely to continue to decline, and when it might be worth buying.
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Nike's stock may look cheap, but it really isn't
Investors may see headlines talk about Nike's stock being at a 12-year low and think it must be a cheap buy. It's been in a free fall, for sure. But the business is also far different from what it was 12 years ago. The growth has dried up, and its future is full of question marks. Just take a look at this chart, which effectively shows why the stock is where it is right now.
NKE Net Income and Revenue (Annual) data by YCharts
Profits have declined over the past decade. And while revenue has risen, it's been at a fairly slow pace, which is not what investors would have expected to see from a supposed top growth stock such as Nike. In its most recent fiscal year, which ended on May 31, revenue was flat, and net income was down 3% year over year.
Although the stock has declined significantly in recent years, it's trading at a forward price-to-earnings (P/E) multiple of 23, which is based on analyst projections of how its earnings will look in the year ahead. Paying that high a multiple for a business that's not growing is expensive. The average stock on the S&P 500 trades at a forward P/E of 21.
That's why I could see the stock falling to less than $30 this year, as investors may demand more of a discount for the lack of growth and uncertainty ahead.
I wouldn't buy Nike's stock until it completely overhauls its business
Nike's brand isn't dead. It's still popular. But I don't think its products can be mass-produced anymore. It can't be everything to everyone. As a luxury brand, with limited supply, that's priced high and commands significant margins, I believe it can do well.
But the business, as it stands today, just doesn't look investable given all the competition from foreign and online retailers. Without a drastic overhaul that involves shrinking its operations, I wouldn't consider buying the stock, and I think investors are better off avoiding it as well, as it isn't as cheap as it looks.
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike. The Motley Fool has a disclosure policy.
