Nike’s Profits Beat Estimates. So Why Is the Stock Crashing?

Nike just posted quarterly profits that cleared the bar. Wall Street analysts are nodding. The stock is in freefall. Welcome to the modern market, where beating expectations isn't enough—you have to beat the ghost of future expectations, too.

The Guidance Gut-Punch

Forget the rearview mirror. The market trades on forward-looking statements, and Nike's outlook for the coming quarters sent a chill through trading desks. The numbers they just hit? Ancient history. It's the forecast that carries the weight, and this one hinted at headwinds—slower growth in key regions, margin pressures, the usual suspects. A classic case of 'sell the news,' even when the news looks good on paper.

Whisper Numbers & The Narrative Shift

There's always a 'whisper number'—the unofficial, hoped-for result that circulates among big funds. Did Nike clear that invisible, higher hurdle? Apparently not. The conversation has pivoted from 'strong quarter' to 'peak growth?' in a matter of hours. When the story changes, the money moves. Fast.

The Bigger Picture: A Sector Re-rate?

This isn't happening in a vacuum. If a bellwether like Nike stumbles on guidance, it raises questions about the entire consumer discretionary space. Inflation fatigue, inventory gluts, shifting spending—all those macro fears get a fresh dose of credibility. One stock's forecast can become a sector's problem.

It's a brutal reminder that in today's market, you're only as good as your next quarter. Delivering the past is a basic requirement; selling the future is the real game. And sometimes, that game is less about fundamentals and more about fear—the kind that turns a profit beat into a panic sell. Just another day where the 'efficient market' proves it's mostly efficient at overreacting.

Key Takeaways

• Nike shares slumped Friday after the athletic apparel giant gave a weaker-than-expected outlook and warned of sales headwinds in China.
• The shoe maker's fiscal second-quarter revenue and earnings beat analysts' estimates as sales in North America rose, but sales in China sank.

Nike shares tumbled Friday, despite quarterly profits that topped estimates, as a weaker-than-expected outlook and headwinds in China weighed on sentiment.

The shares were down nearly 10% to about $59 in recent trading, making Nike (NKE) one of the worst-performing stocks in the S&P 500 Friday, at a time when broader markets gained.

The athletic apparel giant posted earnings per share of $0.53 for the fiscal second quarter, well above the $0.38 analysts surveyed by Visible Alpha anticipated. Revenue climbed 1% year-over-year to $12.4 billion, ahead of projections. Nike benefited from a 9% jump in sales in North America, but its sales in China sank 17%, with a 21% drop in shoe sales.

CFO Matt Friend told investors on Thursday's earnings call that the company expects sales headwinds in China could continue for the rest of the fiscal year before Nike returns to growth, according to a transcript provided by AlphaSense. Friend said Nike expects third-quarter revenue to drop by low-single digits, while analysts had expected a gain, with growth in North America offset by continued weakness in China.

Why This Matters to Investors

Nike's turnaround efforts have shown some signs of progress, but could take more time in China. The stock's drop Friday, on track to mark its largest one-day loss since President Donald Trump's "Liberation Day" tariffs announcement in April, suggests investors were looking for more signs of improvement.

CEO Elliott Hill said Nike is "in the middle innings" of its turnaround plan, which he introduced around a year ago, shortly after taking over as CEO. That plan has involved fewer promotional events, and renewing Nike's focus on creating new products to win customers.

In a note to clients Friday, bullish analysts at Bank of America said Nike's turnaround plan looks to be working so far, though they were disappointed by its results in China. They reiterated a "buy" rating for the stock, though they lowered their price target to $73 from $84.

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With Friday's losses, Nike shares have lost about a fifth of their value in 2025.