Why Nike Stock Lost 16% in April

Shares of Nike (NYSE: NKE) were among the losers again last month, even as the broad market surged. The sportswear giant fell sharply at the beginning of the month after reporting a disappointing third-quarter earnings report, and it stayed down for the rest of the month after that, even as the broad market recovered on cooling tensions in the Middle East.

According to data from S&P Global Market Intelligence, the stock finished the month down 16%. As you can see from the chart below, the stock fell sharply at the beginning of April and never recovered.

NKE data by YCharts

Nike stumbles again

Nike stock is now down 75% from its all-time high after the business has collapsed over the last five years. Decisions under former CEO John Donahoe, including pivoting away from the wholesale market and underinvesting in innovation, led to sales growth turning negative, and new CEO Elliott Hill has been unable to right the ship thus far, despite some positive signs.

Revenue in the fiscal third quarter was flat at $11.3 billion, or down 3% on a currency-neutral basis, which was slightly ahead of estimates at $11.23 billion. On the bottom line, earnings per share fell from $0.54 to $0.35, though that was ahead of estimates at $0.28.

The real concern was Nike's guidance as it dialed back expectations for its recovery. Management said over the next three quarters, it expects revenue to be down low single digits, and sees a return to gross margin expansion in Q2 of 2027, which ends in November 2026.

Wall Street pooh-poohed the results, and several analysts downgraded the stock or lowered their price targets, as they acknowledged that the turnaround would take longer than expected.

Over the rest of the month, there was more news out on Nike, but it failed to move the footwear stock. The company's innovation chief, Tony Bignell, said he was leaving the company after less than a year in that position, an apparent setback for its turnaround efforts.

Nike also said it would cut 1,400 jobs, most of which are in its technology department, geared toward making structural changes in the company. In a positive sign, a new Kobe collaboration sold out in minutes, showing it still has the ability to drive demand.

Image source: Getty Images.

What's next for Nike

There's plenty of reason for investors to be disappointed after the latest earnings report, but if Nike can return to revenue growth and margin expansion three quarters from now, this could be the low point in the stock.

That's a big if, but Nike is still a company with a ton of brand equity, global reach, and an unmatched roster of athletes. If it can reclaim the innovation mantle, better days could be on the way.

Jeremy Bowman has positions in Nike. The Motley Fool has positions in and recommends Nike. The Motley Fool has a disclosure policy.