Buying Nike Is A Mistake

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Buying Nike Is A Mistake

Buying Nike At Current Levels Is A Mistake

Nike has managed to beat expectations, but we can't ignore the fact that revenue continues to decline. On top of that, strategic uncertainty is also making things difficult for Nike's investors.

The Q3 results shows that both the revenue and the earnings were above expectations. This was a win, but the investors remained unfazed, and Nike shares dropped hard.

Weak Outlook From Management

The key reason for this was that the expectations for the revenue and earnings were low. So, it was not a big achievement that the results managed to beat the forecast.

Another reason for the decline was the outlook shared by Nike's management. It made it look look like as if the fiscal Q4 results will be a lot worse as compared to the Q3.

As of now, Nike is trying really hard to clear its excess inventory. In fact, the firm is planning to achieve this even at the cost of profitability.

To make things even trickier, things will get worse for Nike. There are many things that are creating uncertainty for Nike's operating environment. This includes new tariffs, geopolitics, and the volatility in the exchange rates.

There's no doubt that Nike is now an iconic brand, but it doesn't automatically mean it becomes a BUY for investors.

Also, Nike is going through a strategy reset and is in the middle of it. On top of that, the revenues of Nike are declining while its margins are also under pressure.

However, all of these things can be sorted and Nike can get back on track. But, there is a lot of uncertainty to consider buying Nike at the current levels.

But once things start to turn around for Nike, it might become a good stock to buy. But based on the current circumstances, it is best to adopt a wait-and-see approach.

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