Will Nike suffer from the NBA’s conflict with China?

The NBA’s public strife with China has dominated the headlines, will Nike be one of the victims?

Michael O’Mahony
Oct 9, 2019 · 3 min read

The latest financial news and analysis from MyWallSt. Check out our stock market analysis or learn how to get started investing now.

Image for post
Image for post
Photo by chelsea ferenando on Unsplash

It all started with a tweet. In 2019, this prologue can be lifted from the story of an international conflict just as easily as that of a teen drama on your TV screens. We’re closer to the former than the latter with today’s story which may disappoint many of you. The tweet in question is from Houston Rockets GM Daryl Morey, one of the perennial contenders for the coveted NBA championship. He tweeted a message in support of the protests in Hong Kong which led to widespread outcry from the Chinese public.

Read why stopping direct sales on Amazon makes sense for Nike.

Repercussions were swift as Rockets merchandise was removed from online stores and coverage of their games suspended by tech giant Tencent Holdings. The parent company of WeChat went on to further suspend broadcasts of the NBA pre-season, putting pressure on the $1.5 billion deal it has with the NBA to stream its games to a market of around 500 million people.

How does this affect Nike’s stock price?

China is Nike’s (NYSE: NKE) fastest-growing market with sales of over $6 billion in the fiscal year 2019. Nike is also the official apparel supplier of the NBA, with a deal spanning 8 years worth roughly $1 billion dollars. Skin in the game for the Swoosh.

Read why Paypal’s best days are ahead.

Nike’s stock, which has recently hit all-time highs thanks to a positive Q1 report for 2020, took a hit on Tuesday thanks to the conflict. What it does next will depend on the strength of the Nike brand in China. The perception of Nike in China is a global brand rather than an American one, with Nike doing a tremendous amount of work over the past 30 years to maintain its presence in the region. As a result, analysts remain bullish on the stock, with Susquehanna’s Mike Poser reiterating a $106 price target and stating the company won’t “experience any adverse repercussions from Chinese consumers due to the recent NBA spat and overall political turmoil between China and the U.S.”

The one trick to surviving the current volatility of the Chinese market? 30 years of international brand development and relationship building within the region.

MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in Nike.

Image for post
Image for post

Want to experience the best investing app around? Download the MyWallSt app for Android or iOS now!

The MyWallSt Blog

Investing is for everyone, we show you how.

Michael O’Mahony

Written by

Michael is our SEO specialist here at MyWallSt. He’s got his finger on the pulse.

The MyWallSt Blog

Investing is for everyone, we show you how. MyWallSt is a multi-award winning company that helps you to become a confident and successful investor.

Michael O’Mahony

Written by

Michael is our SEO specialist here at MyWallSt. He’s got his finger on the pulse.

The MyWallSt Blog

Investing is for everyone, we show you how. MyWallSt is a multi-award winning company that helps you to become a confident and successful investor.

Medium is an open platform where 170 million readers come to find insightful and dynamic thinking. Here, expert and undiscovered voices alike dive into the heart of any topic and bring new ideas to the surface. Learn more

Follow the writers, publications, and topics that matter to you, and you’ll see them on your homepage and in your inbox. Explore

If you have a story to tell, knowledge to share, or a perspective to offer — welcome home. It’s easy and free to post your thinking on any topic. Write on Medium

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store