Nike Inc (NYSE: NKE) stock fell to $35.5 on Friday, its lowest level since 2014 and 78% below its all-time high. The decline reflects intensifying competition from On Holding (NYSE: ONON), rising bond yields, and the impending removal from the S&P 500 index.

On Holding signed Kylian Mbappe, signaling serious intent to compete with Nike, Adidas, and Under Armour (NYSE: UA). This move adds pressure on Nike’s turnaround efforts under CEO Elliott Hill, which are taking longer than expected. Nike’s fourth-quarter revenue dropped 1% year-over-year to $11 billion on a reported basis and 4% on a currency-neutral basis.

Financial Performance and Outlook

For the full year, Nike’s revenue was $46.4 billion, flat from the prior year. Weakness was concentrated in China, where local brands like ANTA are gaining market share. Analysts expect annual revenue in the current fiscal year to be $45 billion. Management’s strategy focuses on sports emphasis, wholesaler relationships, and marketing improvements, but this has not yet generated strong growth.

Market and Credit Headwinds

Nike will exit the S&P 500 index after 18 years. Bond yields have risen, with the 2030 maturity trading at 5.172% and the 2040 at 5.91%. This indicates higher borrowing costs. S&P Global lowered Nike’s credit rating one notch to A+ from AA-, while Moody’s downgraded it from A1 to A2. The company maintains investment-grade ratings.

Board Changes and Analyst Views

Pershing Square founder Bill Ackman welcomed Alexandre Arnault’s appointment to Nike’s board as a "great development." Arnault, Deputy CEO of LVMH’s wines and spirits division, brings luxury sector experience. Mark Parker and Elliott Hill cited Arnault’s brand evolution expertise as valuable for Nike’s governance.

Analysts remain bearish. UBS slashed its price target from $48 to $42, while Telsey Advisory Group cut it from $47 to $44. Baird, Citigroup, JP Morgan, Morgan Stanley, and BMO Capital Markets also downgraded their outlooks. The average analyst estimate is $48, well above the current price.

Technical Indicators

The stock has been in a strong sell-off over recent years. The Relative Strength Index (RSI) moved to 28.70, indicating oversold conditions. It may retest its April low of $26.75. If headwinds persist, the stock could drop further before any recovery.

What the Numbers Show

Nike faces a divergence between operational stagnation and financial cost pressures. While full-year revenue remained flat at $46.4 billion, rising bond yields (up to 5.91% for 2040 debt) signal increasing financing costs. This occurs alongside credit rating downgrades, suggesting investors perceive higher risk despite the company’s investment-grade status.

Stifel analyst Peter McGoldrick cut his price target on Nike Inc (NYSE: NKE) from $45 to $40 while maintaining a Hold rating. The downgrade reflects anticipated pressure on gross margins due to a more promotional global environment.

Nike is scheduled to report its first-quarter fiscal 2027 results on October 1, after market close. Shares of the company rose 1.18% to $35.96 at the time of publication on Monday.

Revised Estimates and Margin Pressure

McGoldrick lowered adjusted earnings estimates for fiscal 2027 and fiscal 2028 by 20 cents per share each. The new estimates stand at $1.70 per share for fiscal 2027 and $2.05 per share for fiscal 2028.

The downward revision accounts for tougher gross margin comparisons in the fourth quarter of fiscal 2026, which previously benefited from tariff refunds. The analyst noted that the current promotional environment in Western markets has intensified near-term margin headwinds.

Revenue Outlook and Regional Risks

Despite margin concerns, Stifel reaffirmed above-consensus revenue estimates. McGoldrick expects the World Cup to contribute roughly $300 million in revenue during the first quarter. He noted that Nike has reported revenues above its own guidance in each of the last seven quarters.

However, consumer demand for new products remains constrained. The contribution from Hoops Classics continues to shrink. Greater China remains a "question mark" for the near term.

Strategic Context

McGoldrick wrote that the appointment of a new CFO and the upcoming Investor Day on November 16-17 give management no incentive to raise expectations in the near term. The firm models SG&A deleverage on declining revenue in the first half of fiscal 2027, reflecting variable costs associated with a revenue inflection expected in the second half of fiscal 2027 and beyond. This also includes the build-up for the LA28 Olympics in the fourth quarter of fiscal 2028.