Nike's Senior Leadership Change

Student Name
Course ID
Instructor
Institutional Affiliation
1 Something interesting that your company announces and its impact on its stock price. For example, any big corporate events (i.e., mergers and acquisitions, CEO turnover, etc.) that significantly move the stock price?
On 1st March 2021, Nike made an interesting announcement regarding its senior leadership change. Nike Inc.'s Vice-President and General Manager for North America resigned after a Bloomberg report linked her to her son's lucrative sneaker business. She stepped down after having served the Beaverton, Oregon Sneaker Giant for 25 years. However, the announcement did not affect NKE. Following the announcement, NKE gained on NYSE. The stock gained +0.48 to close at 134.31. The leadership change announcement did not directly affect the stock price since NKE has continued to gain on major financial markets. However, on 19th March 2021, the NIKE stock declined following the announcement that the company had missed its revenue target. The stock has been on a downward trend ever since the company announced its quarterly earnings. Despite missing the mark, the company reported revenue of $10.4 billion. Besides, it announced GAAP earnings of $0.90 per share.
2 Something that the company does that the market seems to like or dislike. How do you think about it?
The one thing that Nike does which the market seems to like is its brand marketing effort. Overall, Nike is liked because it's a strong global brand. However, what the market doesn't seem to like is Nike's decision to venture into direct-to-consumer sales. My take on the Nike brand is that it's indeed a strong brand especially given that its stock was not affected by the exit of its long-serving Vice president and general manager. I think that it was better if Nike focused on its core business of manufacturing sneakers rather than go for direct online sales. The company is likely to waste resources competing with dominant players like Amazon, affecting its strategic focus. The Nike brand has been the company’s primary growth driver for decades. Nonetheless, Nike announced that direct-to-consumer sales have the potential for increased profitability as opposed to wholesale operations.
3 What have the market participants commented on the stock? For example, any interesting comments from big institutional investors, short-sellers, etc.? How do you think about their views?
Nike's largest institutional shareholders, The Vanguard Group Inc. and Blackrock Inc., have expressed optimism that investors should strongly bank on Nike's strong brand to emerge from the pandemic period. Indeed, NKE has steadily grown since the onset of the pandemic dispelling the pessimists' projections that the stock might drop. However, comments from short-sellers show that they are trading a lot of caution. My opinion is that institutional investors can undertake significant investment risks than small resellers, whose goal is to make quick short-term gains from the purchase and sale of the stock. I concur with the views of small resellers that, indeed, they need to take calculated risks.
4 What's the beta of your stock (you can find it in "Yahoo Finance" or “Google Finance”). Is it riskier or less risky than the market or its industry peers?
Beta measures the risk volatility of a stock price as compared to the industry. A stock with a beta of 1.1 is likely to increase by a percentage margin of 1.1% for each percentage increment. Thus beta is used to measure the risk of a particular stock within the industry. Nike has a beta of 0.97 and a five-year beta of 0.88. Nike's five-year beta falls in the 17.9% percentile for the industry.
NIKE Beta (5 Year) Benchmarks

Name

Ticker

Beta (5 Year)

Deckers Outdoor Corporation

NYSE: DECK

0.80

NIKE, Inc.

NYSE: NKE

0.88

Under Armour, Inc.

NYSE: UAA

1.24

Steven Madden...