Investors seem to be keeping cool heads over the instantly infamous Nike shoe malfunction that sent top college basketball player Zion Williamson limping home during a game Wednesday night.
There is no question the moment when Williamson’s shoe blew apart in the first few seconds of the game between rivals Duke University and University of North Carolina is a deeply embarrassing one for Nike, a brand practically synonymous with basketball.
“Clearly with Nike’s success intrinsically tied to the technical performance of its products, this is clearly something they will be looking into and is not something that should be simply dismissed,” said Nomura Instinet analyst Simeon Siegel. “However, at the end of the day, at this point, the fact that it is one shoe is worth keeping in perspective.”
If Nike manages the situation well, many on Wall Street say the incident will likely have a limited impact on the company’s stock.
“Nike senior management has a history of acting masterfully at always protecting and enhancing the company’s brand image with core customers, even through moments of pronounced consternation,” said Oppenheimer analyst Brian Nagel.
Nike shares were down about 1 percent Thursday morning. The stock, which has a market value of $132.1 billion, has risen nearly 27 percent over the past year, and is up more than 14 percent since the start of this year. By comparison, rival Under Armour has a market cap of $9.7 billion and its stock has also gained about 27 percent over the past year, and is up 22 percent since the start of the year.
A falling share price might even present an opportunity for Nike investors, said Needham analyst Rick Patel.
“If Nike stock gets hurt on the Zion news, we would be buyers on weakness,” he said. “Nike generates the vast majority of its sales from lifestyle or fashion categories (this includes Jordan) and we think it’s unlikely this part is the business gets hurt as these aren’t serious basketball athletes.”
