NKE Stock Ticks Higher Overnight: Retail Stays Bullish On Nike Ahead of Q1 Earnings – 'Time To Reinvest'

Nike faces a major earnings test as shares plunge 44% year-to-date, and short interest reaches 87 million shares.

• Nike shares have fallen more than 77% from their 2021 peak, while short interest reaches 87 million shares. 
• Nike is cutting back on discounts and third-party online sales in China to rebuild its premium image.
• Jefferies expects earnings above consensus despite ongoing strategic challenges. 

Nike Inc. (NKE) heads into its fiscal first-quarter (Q1) results, with investors watching closely for signs that its turnaround efforts are gaining traction. The athleticwear company will release its results after Thursday's market close, while retail traders on Stocktwits remain bullish despite heavy pressure on the stock.

Nike stock edged 0.3% higher overnight, ahead of Thursday. However, the stock has fallen for two straight months. 

Nike Faces Prolonged Stock Decline And Heavy Short Interest 

Nike is going through a difficult period, with its stock down more than 77% from its November 2021 peak. Nike's earnings arrive as short sellers have built a sizable position in the stock. About 87 million shares are now sold short, representing roughly 7% of the company's available shares. 

However, Jefferies expects Nike to post a Q1 revenue of about $11.5 billion and adjusted earnings of $0.48 per share. Both estimates sit above current consensus expectations of $11.3 billion in sales and $0.44 in earnings per share, according to Fiscal.ai data.

The company has faced years of challenges, including problems with its direct-to-consumer strategy, weaker relationships with retail partners, softer demand for lifestyle products and a long slowdown in China. 

Nike’s China Strategy

Nike is also working to repair its business in Greater China, where frequent promotions have pressured the brand's premium positioning. Under CEO Elliott Hill, the company has moved away from aggressive discounting and is focusing on a strategy to reduce sales through third-party online retailers to strengthen pricing and restore the brand's appeal. The strategy carries risks because third-party sellers account for a high-teens percentage of Nike’s China sales.

Nike’s technical indicators show how severe the stock’s decline has been. Koyfin data shows its monthly RSI has fallen to its weakest level since 1984, suggesting the stock is heavily oversold.  

NKE Stock: Retail Stance 

However, on Stocktwits, retail sentiment around the stock remained in ‘bullish’ territory. 

A user said, “Payday! Time to reinvest. Current forward dividend yield: 4.63%.”

Another user said, “If there was ever a time to be a contrarian, I'm pretty sure it's now. Got my earnings lottos.” 

A third user quipped, “People will soon scratch their heads here, confused as to how they missed the most obvious play!”

NKE stock has crashed 44% year-to-date. 

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