Nike’s stock suffered its biggest single-day drop in several months yesterday (Sept. 4).
It was the day after Colin Kaepernick, the former NFL player who kneeled during the US national anthem in protest of police shootings of unarmed black Americans, shared that he would feature among the athletes in its new campaign. The news prompted outrage and calls for a boycott of Nike from those who believe Kaepernick’s form of protest to be disrespectful. The stock plunge erased about $4 billion from the company’s market capitalization.
Sounds like a major crisis for Nike, right? The situation looks much less dire when you put that drop in context.
This year has been good to Nike’s share price. Investors temporarily balked in March, around the time of the very public firings of some top Nike executives over allegations of a toxic boys’ club culture. Stock buyers quickly moved on, even as further complaints emerged. They’ve responded more to the company beginning to regain its footing in the US, where sales had fallen a few quarters in a row. Through August, Nike’s stock climbed more than 30% this year. Yesterday’s dip of about 3% was a relatively minor setback, it appears.
The price could, of course, slide further—though as of this writing, the drop has stabilized.
What investors care most about is that Nike continues to sell lots of sneakers. The boycotts and protests over its use of Kaepernick may deliver a brief sting. Still, in the long-term, Nike seems more likely to benefit, attracting the young, racially diverse next generation of Americans it wants as customers, and the move has generated a lot of positive responses. (It’s worth noting, too, that the dip in Nike’s share price could be related to factors other than Kaepernick. Adidas’ stock has fallen as well.)
Either way, those who say Nike is getting killed over Kaepernick are exaggerating.