The Nike stock price has retreated in the past few weeks and moved to the strong, pivot, reverse level at $68.75 as investors wait for the latest earnings,which will provide more color about its turnaround efforts. NKE was trading at $68, down by 12.85% from its highest level in August.
Nike stock price to react to earnings results
The Nike share price has retreated in the past few weeks as investors waited for the first quarter earnings.
The most recent results showed that its revenue dropped by 10% in the last financial year to $46.3 billion, as well as by 12% in the fourth quarter.
These results were a continuation of the company’s weakness as it faces substantial competition from companies like Adidas, On Holdings, and Under Armour. Its revenue also dropped because of its previous strategy of focusing on direct sales.
The results also showed that its gross margins also continued falling in the fourth quarter as the effective tax rate surged to 33.4%.
Nike has been implementing a turnaround strategy since 2024 as it seeks to ride the ongoing challenges in its business.
The new strategy calls for a return to basics, where it works to boost its wholesale business, which has been trailing as it focused on direct sales.
Nike is also putting more emphasis on sports by reprioritizing the core athletic categories like running, training, and basketball.
The company is also working on research and development to come up with new products, such as the recently launched After Dark Run Series. It hopes that this innovation will help to drive its revenue growth in the coming years as it competes with other young companies.
Nike is also having an aggressive inventory cleanup, which it hopes will help to stabilize its huge inventories. The recent results showed that the company had an inventory of $7.489 billion, down slightly from the same period last year.
Read more: Nike shares jump on improved outlook, shift from China; analysts see recovery
Nike earnings preview
Wall Street analysts expect that Nike’s revenue will come in at $10.9 billion on Tuesday, down by 5.18% from the first quarter last year
Nike’s earnings per share is also expected to drop from $0.70 to $0.27 as the restructuring costs remained at an elevated level.
Nike’s forward guidance for the second quarter is expected to be $11.9 billion, down by 3% from $12.3 billion last year, while the earnings per share will be 50 cents.
Nike share price technical analysis
NKE stock chart | Source: TradingView
The daily timeframe chart shows that the Nike stock price formed a double-top pattern at $79.6 and then pulled back to the current $68.75. A double-top is one of the most popular bearish patterns in technical analysis.
The stock has moved below the 50-day Exponential Moving Average and the Ichimoku cloud. It has also retested the important support at $68.75, the strong pivot reverse.
Therefore, the Nike share price will likely continue falling as sellers target the next key support at $62.5, the ultimate support of the Murrey Math Lines tool.
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