Nike Up 9% Premarket as Earnings Report Sparks Confidence
Nike reported fiscal Q1 2024 earnings and gross margins that beat Wall Street estimates, sending the shares up over 9% in the Friday premarket. The company’s revenue missed analysts’ expectations, but a broadly positive quarterly report offset the metric.
Nike’s Earnings and Gross Margins Growth Exceed Estimates
Shares of Nike spiked over 9% in premarket trading Friday after the footwear and apparel giant reported better-than-expected Q1 results, leading to a resurgence in investor confidence. The stock was sitting at $98.3 per share at publication.
Notably, Nike reported adjusted earnings per share (EPS) of $0.94 for the first quarter, well above the consensus estimates of $0.75 per share. The figure was also higher than adjusted EPS of $0.93 reported in the year-ago period.
Revenue came in at $12.94 billion, slightly below the estimated $12.99 billion, but above the $12.69 billion generated in the same quarter last year. Gross margins stood at 44.2% in the latest three-month period, compared to the estimated 43.7% and 44.3% from a year ago.
Nike said inventories declined 10% year-over-year to $8.7 billion in Q1, marking a bigger decline than the consensus projection of $8.84 billion. This represents a significant boost for Nike after an inventory excess weighed on the retailer throughout 2022.
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Why is Nike Struggling in 2023?
From a stock market performance viewpoint, the gains in the premarket offer a much-needed boost for Nike.
The company’s share price had come under significant pressure this year, taking its year-to-date losses to more than 20%, making it one of the worst-performing Dow Jones Industrial Average (DJIA) components. Nike’s shares closed at $89.63 on Thursday, close to its 11-month lows.
The company attempted to open new growth venues through a foray into Web3 last year, but the move couldn’t have come at a worse time, given the 2022 crypto winter. This, coupled with broader concerns like waning demand and a sluggish economy in China – Nike’s second-biggest market – sent the shares on a record losing streak.
However, assuming the stock can uphold its premarket gains, NKE shares seem ready to break through the resistance level of $96.5. Clearing that barrier would set the stock on track to attack the next resistance point at around $99.4.
Do you think Nike’s shares can reclaim some of the lost ground before the end of 2023? Let us know in the comments below.