Nike has limited time to prove itself, especially after a tough analyst downgrade
Nike is on the clock — its turnaround efforts are taking too long. Our patience is wearing thin. The stock has been a “remarkable loser,” Jim Cramer said Wednesday on CNBC. In a second day of broader market selling, Nike was giving back nearly half its 3.3% gains in the prior session. Shares are down more than 30% year to date versus the S & P 500 ‘s 6.5% advance. Jim agrees with how RBC Capital Markets described the situation. “Nike turnaround under Elliott Hill is making progress, but slower and narrower than we were anticipating,” analysts wrote in a Wednesday note, pointing to a roughly 50% drop in the stock since Hill took over in October 2024. They downgraded Nike to a hold-equivalent rating from a buy and reduced their price target to $50 per share from $70. RBC said Nike still needs to speed up its inventory cleanup, regain share in key categories like running and women’s apparel, and reignite growth in its direct to consumer business. Nike can’t catch a break despite a slew of recent insider buying from both Hill and outgoing Apple CEO Tim Cook, who is a Nike board of member. Normally, the market greets insider buying more positively. In the last three months, the stock dropped more than 20%. That steep decline is weighing on the Club, which has unrealized losses of about 36% on the position, which was started last September at a price of roughly $69 per share. NKE YTD mountain Nike YTD Even the men’s soccer World Cup and the opportunities that it brings may not be enough to jump-start Nike’s recovery. “The balance of 2026 is likely to remain a no revenue growth setup, with catalysts such as the World Cup and pockets of product newness not sufficient to offset clean up actions elsewhere in the business,” analysts wrote. When Hill came out of retirement to become CEO, he launched his “Win Now” strategy to restore Nike’s stronghold. Hill’s plan brought forth sports-themed stores, senior leadership changes, and the rebuilding of wholesale relationships that were fragmented under predecessor John Donahoe. While seeing success during Covid with a direct-to-consumer focus, Donahoe stayed the course far too long after the pandemic. There are some bright spots in Hill’s turnaround, including Dick’s Sporting Goods reporting an increase in comparable sales last quarter. Nike is the largest vendor at the retailer, which completed its purchase of Foot Locker in September 2025. RBC said the Nike/Dick’s relationship is a double-edged sword. “Dick’s + Foot Locker combination (DKS + FL) likely to drive tighter buying discipline,” the analysts wrote. They are worried that Dick’s might cut underperforming styles by 30%. Hill’s efforts haven’t been enough to positively move the needle on the stock, especially with China still a significant hurdle . Fiscal third quarter sales from the world’s second-largest economy didn’t come in as badly as feared. However, Nike quickly snuffed out optimism of turning point, forecasting China revenue to be down about 20% in its current quarter, which will be reported after the bell on June 30 . Bottom line Jim has been vocal in his disappointment with Nike for sometime, despite believing that Hill will eventually turn Nike around. But, how long can we wait? Jim called our entry into Nike stock “a mistake” during Wednesday’s Morning Meeting . If this next quarter doesn’t come with marked improvements, he is willing to cut our losses. “We’re going to take the hit,” he stressed. (Jim Cramer’s Charitable Trust is long NKE. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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