TLDR:
- Bill Ackman’s Pershing Square increased Nike stake to $1.4B from $220M
- Nike shares are down almost 30% year-to-date
- Nike missed Q1 revenue expectations but beat earnings estimates
- TD Cowen lowered Nike price target to $73 from $78
- RBC Capital reduced Nike price target to $80 from $82
Pershing Square Capital Management has dramatically increased its stake in Nike (NKE), raising its investment to $1.4 billion from approximately $220 million at the end of June, according to recent SEC filings.
The move by Bill Ackman’s hedge fund comes during a challenging period for the athletic wear giant. Nike’s stock has declined almost 30% year-to-date and has fallen about 28% from a year ago.
The investment represents a return to Nike for Pershing Square, which previously held about 5.8 million shares at the end of 2017. The fund sold its position after several weeks when Nike’s stock price climbed 32%, generating a profit of around $100 million.
Nike’s recent challenges include a February announcement of plans to cut 2% of its workforce, amounting to more than 1,500 jobs, as part of a broader restructuring effort. In September, the company announced a leadership change, with CEO John Donahoe stepping down and company veteran Elliott Hill, who started at Nike as an intern in 1988, taking the helm.
The company’s first-quarter results were mixed, missing revenue expectations but beating earnings estimates. Nike reported earnings of 70 cents per share on revenue of $11.59 billion, compared to analyst expectations of 52 cents per share on $11.65 billion in revenue.
During the earnings call, Chief Financial Officer Matthew Friend acknowledged the company’s challenges, stating,
“We are moving aggressively to shift our product portfolio, create better balance in our business, and reenergize brand momentum through sport.”
He added a note of caution:
“That said, a comeback at this scale takes time, and while there are some early wins, we have yet to turn the corner.”
Investment firms have recently adjusted their outlook on Nike. TD Cowen lowered its price target to $73 from $78, maintaining a hold rating. The firm’s analysts cited concerns about Nike’s business state based on channel contacts and field work.
TD Cowen pointed out that Nike has lost market share in specialty running, tennis, and lifestyle segments to smaller competitors like Hoka, On, Asics, and Saucony. The firm also noted “Jordan retro fatigue” among over-distributed franchises that Nike management is currently addressing.
RBC Capital analyst Piral Dadhania also reduced the firm’s price target to $80 from $82, while maintaining a sector-perform rating. Dadhania described Nike’s investment story as “fairly balanced,” noting organizational challenges offset by potential upside in fiscal 2026 consensus estimates.
The investment comes as part of Pershing Square’s broader portfolio adjustments. The fund, which manages approximately $18.3 billion in assets, made several other moves in the third quarter, including investing in Seaport Entertainment and increasing its stake in Brookfield Corporation.
Ackman, in Pershing’s June 30 interim report, expressed his view on market volatility: “Greater stock market volatility is the long-term friend of the active investor with permanent capital who seeks to identify high quality companies which are not dependent on the capital markets to implement their business strategies.”
Nike is scheduled to report its second-quarter results on December 19, which will provide more insight into the company’s progress with its turnaround efforts.
The large investment by Pershing Square comes at a pivotal time for Nike as it works to address multiple challenges, including increased competition, inventory management, and changing consumer preferences.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
