Cruz mocks Nike's 80% stock plunge as brand faces financial and political backlash

Key points

• Nike's stock hit a 12-year low, dropping 80% from its 2021 peak of $177.51.
• Sen. Ted Cruz criticized the brand on social media, citing the 2019 cancellation of a Betsy Ross-themed shoe as a turning point.
• The company has lost nearly $200 billion in market value over the past five years.
• Financial analysts note a 47% decline over the last year, driven by weak performance in Greater China and the Converse division.
• Bernstein analysts maintain a bullish $72 price target, suggesting an 84% upside, despite insider selling by executives.

Background

This story follows a long-standing tension between conservative politicians and major corporations over cultural messaging. In 2019, Sen. Ted Cruz and other conservatives boycotted Nike after the company canceled a Betsy Ross-themed shoe, a decision prompted by pressure from Colin Kaepernick. The current stock decline is part of a broader trend of consumer discretionary brands facing scrutiny for their political stances, as seen in recent controversies involving other major brands.

How outlets are covering it

Fox News frames the stock decline as a direct consequence of Nike's 'woke' marketing and cultural pivots, highlighting Sen. Ted Cruz's criticism of the brand's 2019 decision to cancel a Betsy Ross-themed shoe. In contrast, 24/7 Wall St. and Yahoo Finance focus on financial fundamentals, noting that while the stock has fallen 80% from its 2021 peak, the decline is also driven by weak sales in Greater China and the Converse division. While Fox News emphasizes the political backlash, financial analysts point to a potential recovery, with Bernstein maintaining a bullish $72 price target despite insider selling by executives.

Why it matters

The story highlights the intersection of corporate culture and financial performance, showing how political and cultural decisions can impact a company's market value. It also underscores the ongoing debate between conservative and progressive views on corporate responsibility and cultural messaging, with potential implications for other major brands.

What to watch

Investors will watch Nike's upcoming Investor Day on November 16-17 for updates on its 'Win Now' turnaround strategy. Analysts will also monitor the company's performance in Greater China and the Converse division, as well as any potential recovery in its stock price. The story may also influence other brands' decisions on cultural and political messaging, as they navigate the balance between consumer expectations and financial performance.