NIKE, Inc. (NKE): A Bull Case Theory

We came across a bullish thesis on NIKE, Inc. on LongYield’s Substack . In this article, we will summarize the bulls’ thesis on NKE. NIKE, Inc.’s share was trading at $72.63 as of July 11^th. NKE’s trailing and forward P/E were 33.62 and 41.32 respectively according to Yahoo Finance.

Nike’s fiscal Q3 2025 performance highlighted significant operational and macroeconomic challenges, with revenues declining 9% year-over-year to $11.3 billion and EPS dropping 30% to $0.54. While beating expectations, margins compressed sharply due to higher markdowns, wholesale discounts, and tariff-driven cost inflation, dragging gross margins down by 330 bps to 41.5%.

Revenue contraction was broad-based, with Greater China falling 15% and NIKE Direct down 10%, driven by a 15% decline in digital sales. Despite these setbacks, Nike’s management emphasized that the “Win Now” strategy—focused on innovation, full-price digital sales, and operational efficiency—would have its largest impact in Q4 2025.

New tariffs on Vietnamese and Chinese imports increased Nike’s weighted production costs by 56%, leading to June price hikes that may pressure demand in price-sensitive regions. Inventory improved 2% YoY, while Nike returned $1.1 billion to shareholders, signaling capital discipline. Competitive dynamics worsened as Adidas gained share, particularly in Greater China, amid Nike’s double-digit regional decline.

Yet Nike continued launching athlete-driven products and brand initiatives, including a LEGO partnership and SNKRS app enhancements, to reinvigorate engagement. The company is repositioning its digital business away from discounting, which could support future margin recovery. Leadership changes and a renewed focus on performance and storytelling under CEO Elliott Hill aim to stabilize the brand.

While Q4 guidance reflects ongoing headwinds—projecting mid-teens revenue declines and further margin compression—analysts remain split on near-term prospects. However, long-term recovery potential and brand resilience position Nike as a watchlist candidate, with a possible inflection point tied to tariff mitigation, strategic execution, and consumer demand normalization.

Previously we covered a bullish thesis on NIKE, Inc. (NKE) by LongYield on Substack in June 2025, which highlighted execution risks, margin pressure, and potential turnaround via the “Win Now” strategy. The stock has appreciated ~16% since. The thesis still stands as Q4 is seen as an inflection point. LongYield shares an identical thesis but updates it with improved clarity on tariffs and valuation.

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Disclosure: None.