Ricardo Pillai
3 min read
In This Article:
We came across a bullish thesis on NIKE, Inc. (NKE) on LongYield’s Substack. In this article, we will summarize the bulls’ thesis on NKE. NIKE, Inc. (NKE)'s share was trading at $62.77 as of 4th June. NKE’s trailing and forward P/E were 20.72 and 29.85 respectively according to Yahoo Finance.
A sportsperson running with style and grace, embodying the company's performance footwear.
Nike’s fiscal Q3 2025 results underscore a turbulent stretch for the athletic giant, with revenues falling 9% year-over-year to $11.3 billion amid macroeconomic pressure, promotional intensity, and new U.S. tariffs on Asian imports. Despite a 30% YoY EPS decline, Nike beat expectations with $0.54 per share, helped in part by reduced SG&A spending.
However, gross margins fell sharply by 330 basis points to 41.5%, reflecting markdowns, cost inflation, and an unfavorable channel mix. Greater China posted the steepest drop, with 15% revenue contraction, while North America and EMEA also declined, suggesting market share losses to competitors like Adidas. NIKE Direct revenues fell 10%, with digital down 15% as the company shifts its digital channel toward full-price selling, reducing markdowns and promotional events.
Tariffs hitting imports from Vietnam and China—Nike’s key manufacturing hubs have pushed the company to raise prices starting June 1, potentially dampening demand further. In response, Nike is implementing its “Win Now” strategy, aimed at cost efficiency and reigniting brand momentum, with its impact expected to be most visible in Q4. Meanwhile, leadership changes, including a new president and intensified marketing efforts such as high-profile sneaker launches and a partnership with LEGO, aim to reinforce consumer engagement.
Although Q4 guidance implies further revenue and margin pressure, management believes this will mark the peak of near-term challenges. Analysts remain mixed, balancing short-term risks with long-term brand resilience. At current levels, the stock offers modest upside, but Q4 results and the effectiveness of Nike’s strategic initiatives will be critical to reestablishing investor confidence.
We previously covered a bullish thesis on Nike (NKE) by Any_Chocolate6194 on the Value Investing Subreddit in May 2024, which emphasized the brand’s global dominance, resilient wholesale recovery, and reasonable valuation amid market pessimism. Since then, the price of the stock has been stable observing a fluctuation of 50bps. LongYield’s June 2025 Substack builds on this view but focuses more on near-term execution risk, margin pressure, and the potential for a turnaround via Nike’s “Win Now” strategy and refreshed leadership—framing Nike as a recovery story with long-term brand durability.
