THE GHOST TRAIN
THE FINANCE GHOST: Nike, just don’t do it
A high multiple which isn’t grounded in earnings growth has made the famous sneaker firm vulnerable to internal and external pressures
Nike has now shed 30% of its value in 2024. If you’d bought the world’s most famous sneaker company five years ago, you should’ve been on the right side of trends such as growth in e-commerce and the casualisation of the world during the pandemic. Instead, you would be down 10% on your position and dividends wouldn’t have saved you.
The p:e multiple at Nike was about 34 five years ago. It’s now crashed to 20 — an even lower level than we saw in March 2020, when the world went mad. Even though earnings are up over five years (admittedly not by much), the unwind in the valuation multiple has ruined returns...
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