Nike Stock Is Down and the Crowd Is Scared -- Is That Your Signal to Buy?

As soon as it seems Nike (NYSE: NKE) stock has bottomed out, it continues to reach new lows. Its latest quarterly results show the turnaround is taking longer than investors expect. Revenue in fiscal 2026's Q3 (ended Feb. 28, 2026) was flat year over year at $11.3 billion, and earnings fell 35%. The stock tumbled after the report's release and is now down 29% year to date.

Patient investors may see the market's fear as a rare chance to buy an iconic consumer brand at a steep discount. There are reasons to believe Nike stock will eventually recover, but there are also reasons why it's not worth buying right now.

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Reasons to buy Nike stock

Nike's revenue and profitability didn't show the meaningful improvement investors were hoping for, but there were still a few silver linings.

Nike's largest market, North America -- which accounts for nearly half of total revenue -- showed signs of progress. Revenue in its home market rose 3% year over year, reversing the 4% decline in the same quarter last year. That improvement appears tied to stronger momentum in wholesale, along with deeper relationships with key sporting goods partners like DICK'S Sporting Goods and Foot Locker.

Another encouraging sign: Classic footwear franchises like the Air Force 1 and Air Jordan 1 are seeing sales stabilize. More importantly, running shoes -- Nike's bread-and-butter product category -- posted sales growth of more than 20%.

With these encouraging trends, management believes it can get back to more balanced revenue and profit growth in its largest market in the near term.

Reasons to be cautious with Nike

The positives are still offset by weakness in other areas of the business. While sell-through improved in February, it remained below management's expectations. That suggests products are sitting on retail shelves longer than Nike wants, which can limit the company's ability to reaccelerate growth.

Sportswear is also struggling to gain traction, creating another headwind. Sportswear revenue fell in the low-double-digit range during the quarter. Management also said online sales remain "too promotional," with discounting still doing too much of the heavy lifting.

Some of these issues may not reflect a weakened brand, but rather a combination of lagging product innovation and broader softness in consumer spending. Higher prices over the past few years have strained household budgets, and Nike may be feeling that pressure. If the economy improves and Nike refreshes its wardrobe offerings, today's headwinds could eventually become tailwinds.

Still, Nike's turnaround will take time. CEO Elliot Hill said the work being done on new products won't fully show up until spring 2027. That implies Nike may not deliver materially better revenue and earnings for at least a year, and that could leave the stock treading water until then.

And with the stock trading at 24 times next year's earnings estimates, Nike may not be the bargain investors are looking for. Investors might want to see further proof in the financial results before buying.

John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike. The Motley Fool has a disclosure policy.