Nike Stock Down 60%: Is It a Buy or a Trap? | Friday Focus with Ross Healy

Nike has long been a household name, fueled by iconic products like the Air Jordan and celebrity endorsements from LeBron James and Kobe Bryant. But after a 60% decline from its highs, investors are asking: is Nike now a bargain, or is it still overvalued?

Ross Healy applies Structural Valuation Analysis (SVA) to answer this question.

The Historical Context
Since the launch of Air Jordans in 1984, Nike’s earnings and fair market value have grown steadily. Yet, Ross highlights a consistent trend: every time the stock has reached fair market value, it has struggled to move higher.

The Jaws of Death
During the post-2008 period, Nike’s stock price raced far ahead of its fundamentals, reaching a valuation of 24x book value. This divergence between price and earnings created the “jaws of death” – a classic setup where inflated prices eventually collapse back toward fair value.

Management’s Return
Elliot Hill, a familiar face, has stepped back into leadership. Historically, new management in shoe companies can spark innovation and profitability. But Ross questions whether Nike can repeat that cycle in the face of declining earnings.

The Current Picture
Today, Nike’s stock is struggling to break above its “bubble price,” while fair market value continues to decline. A short-term rally could be possible if support holds, but the long-term outlook raises concerns.

Ross’s Verdict
Ross Healy remains cautious. Investors should be wary of chasing Nike at current levels, as the pull of declining fair market value may weigh heavily on the stock.

➡️ Read more Friday Focus insights and watch Ross’s analysis on YouTube.

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