Stop Doing It - Nike Stock Trends Down After New Ad Announcement

Drip Drip Drip

What goes up, must come down.

The famed Nike swoosh took a bit of a hit on Tuesday via its stock price after the announcement that Colin Kaepernick would be the face of their new ad push for the 30th anniversary of the “Just Do It” campaign. My colleague Brandon Morse covered this yesterday here with Nike Learned Nothing From The Ratings Disaster The NFL Faced When It Embraced The Anthem Protesters

Well so far, they “did it” all right.

On the first full day of trading on the Dow Jones Industrial following the announcement, Nike lost 3.16% of its value. Hardly a death blow but is it a sign of things to come?

According to an article over at CNN Money, some investors are looking long term with Nike and they just might ditch it instead of “do it”:

One analyst expressed concerns about Nike’s ties with Kaepernick.

“Nike’s campaign will generate both attention and discussion which is, arguably, one of its central aims,” wrote Neil Saunders, managing director of GlobalData Retail, in a report Tuesday. “However, it is also a risky strategy in that it addresses, and appears to take sides on, a highly politicized issue.”

The ad could ultimately alienate customers and turn them to rivals’ products — which is not the purpose of a marketing campaign, Saunders said.

Nike stock is still up 30% for the 2018 cycle so the company has been doing well enough that they can take a momentary hit like this and it will be a bump in the road. However, the one wild card that could change everything is if one person hops into the fray.

Donald Trump.

President Trump has yet to tweet about this and, as mentioned in Brandon’s article above, the NFL has taken a sizeable hit after Trump decided to call out the kneeling controversy started by Kaepernick. If POTUS wants to take on Nike he very well could affect the long-term value of the company.

As Neil Saunders in the CNNMoney article also states…

“While it is noble to take a stand on something, it is also commercially imprudent to dash headlong into a very sensitive issue which polarizes opinion,” Saunders wrote, adding that Nike “cannot afford to make bad decisions.”

Investors don’t care about social causes. They care about their investments.

Let’s see if the new “Just Do It” frenzy does it for Nike’s bottom line.