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Trade Idea: Investing in Nike’s Stock

18 April 2019  |  TRADING IDEAS

Nike stock price

At Nike’s IPO in 1980, stocks were set at 18 cents. Almost four decades later, it’s nearing $85, making it a good pick for overseas stock trading. To put it in simple terms, if you had invested $10,000 in Nike in September 2008, it would have increased in value to $61,550 by September 2018. This includes both dividends and incremental share prices.


Around the world, the Nike brand is known for its distinct tag and logo – Just Do It. In recent years, it has also been recognised for endorsing controversial stars like Collin Kaepernick and Serena Williams. In part, these polarising figures may have shored up Nike’s value by attracting a younger crowd. Increasingly so, the ‘younger generation’ support causes and speak up for themselves. This demographic is drawn to celebrities that ‘stick it to the man’ and celebrate their individuality with – in this case – a banned cat-suit and taking a knee.

Cultural Ethics is Good for Business

In this way, Nike stands for character and personal values. At the same time, it's a sports brand, so the implication is Nike gear helped these stand-out athletes achieve their winning ways, both on and off the court/field. For clothing brands, these associations are a key part of profitability, because they raise aspirational qualities, which lead to more sales, better positioning and soaring stocks.


In some ways, Nike’s current success is a surprise. Many commentators felt their choice of brand ambassadors would alienate their customer base. There were even online campaigns to burn or boycott the brand. But any loss of fans seems to have been countered by the fanbase Nike gained. The positive PR also helped the public forgive some of Nike’s past flaws. They’ve previously had child labour cases and accusations of running sweatshops. Today though, they're seen as a social crusader, which is a massive boost to anyone investing in Nike's overseas shares.

It helps that Nike has its finger in so many pies. Aside from tennis and American football, Nike also sponsors Kenyan marathoner Eliud Kipchoge and Berlin boxer Zeina Nassar. Other Nike stars include skateboarders, (paraplegic) basketballers, surfers, soccer stars, and even a 10-year-old weightlifter (who was born without legs). This social consciousness approach has won the brand a whole new swarm of fans, and it’s paid in spades for investors as well. 

Digital expansion for greater profits

Nike's success isn't all driven by social responsibility. The brand has seen a 36% rise in digital business. This is mainly in shoe sales, which have seen a 13% increase in 2019. Last year's annual footwear sales were $24billion, and as this year is only a few months in, those stats are very promising. 

This isn’t just about eCommerce and ‘everything apps’. Apps craft meaningful user experiences, but they also help the company sense demand, so it can strategise supply. By creating personalised customer channels via their Nike products, they have better control over their supply chain. Their seamless digital tools then make it easier for customers to order and buy. A lot of this takes place via NikePlus, a membership program. 

As explained by Nike CFO Andy Campion, the company aims to make “…  direct, unbreakable relationships …” with consumers through smartphones, because customers “… carry them everywhere they go.” 

Their not-so-secret weapon is SNKRS (sneakers), a Nike app that sends customers news and notifications, enabling the in-app purchase. It taps into the urgency and immediacy of the pre-order and flash sale culture. These all come together to bolster Nike's financial performance. The app currently generates revenue (and traffic) in triple digits. Tagging and tracking are vital parts of the process as well. Promotional activities from the stars on its roster also boost the bottom line.

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