Nike stock lost $200B in value since its 2021 highs: what is ailing the sports giant?

Nike's steep fall on Monday masked a deeper problem facing the sportswear giant: investors are growing increasingly skeptical that its long-awaited turnaround can restore growth after years of weakening demand, strategic missteps and mounting challenges across key markets.

Nike shares fell about 4% on Monday, closing at their lowest level since September 2014 and extending the stock’s prolonged decline.

While shares were up about 1% during premarket trading on Tuesday, the decline has extended a brutal period for investors.

Nike’s stock has now fallen about 78% from its 2021 record high, erasing more than $200 billion in market value as the company struggles to reignite growth after years of strategic missteps, weaker demand in key markets and a difficult transition in its retail business.

Experts say On Holding's earnings earlier this month also seemed to have weighed on the stock's movement on Monday.

The Swiss sportswear company reported second-quarter sales below Wall Street expectations and issued cautious full-year guidance.

On Holding reported second-quarter sales of $1.076 billion, below the $1.110 billion consensus estimate.

Its full-year 2026 revenue forecast of $4.39 billion to $4.50 billion also fell short of market expectations.

Its shares had plunged 19% after the earnings.

For Nike investors, the numbers raised an uncomfortable question: whether weakness in premium athletic footwear is becoming broader rather than being confined to the company’s own execution problems.

A turnaround that is taking longer

Nike's latest sell-off reflects a growing gap between what investors hoped to see from CEO Elliott Hill’s turnaround strategy and what the company's financial results are delivering.

Hill returned to Nike in 2024 after retiring from the company, bringing extensive experience across its operations and culture.

His strategy has been to rebuild Nike around its core strength — sport — while reversing some of the previous management's emphasis on fashion and direct-to-consumer sales.

The company has been rebuilding relationships with wholesale partners such as Foot Locker while trying to restore momentum in performance categories and develop products that can attract a broader range of consumers.

There are signs that parts of the strategy are beginning to work.

Jefferies analysts said Nike's fiscal fourth-quarter results were better than feared, while noting that the company's renewed emphasis on sports was showing early signs of paying off.

"Nike's emphasis on its sports business is showing early signs of paying off, though performance in China remains a drag on the company," the brokerage wrote.

The problem is that the improvements have yet to translate into a convincing acceleration in overall sales.

Nike's direct-to-consumer business, including its stores and digital platform, remains weak.

That is particularly important because Nike spent years pushing customers toward its own channels in an effort to gain greater control over pricing, customer relationships and margins.

That strategy has left the company with a difficult reset as it tries to restore wholesale distribution without undermining its own retail operations.

Investors are still waiting for sales to bottom

Nike's most recent earnings offered some positivity but a dim outlook did not help.

The company reported fiscal fourth-quarter adjusted earnings of 20 cents per share, excluding a 52-cent benefit related to the expected recovery of import tariffs.

Revenue fell 1.1% from a year earlier to $11 billion. Both figures were slightly better than Wall Street expectations, with analysts polled by LSEG expecting earnings of 13 cents per share on revenue of $10.9 billion.

The earnings beat, however, was overshadowed by Nike's outlook.

Management expected sales to continue declining through the first half of fiscal 2027 as it dealt with tariff pressures, geopolitical uncertainty and cautious consumer spending.

Nike now expects revenue to fall by low- to mid-single digits between March and November, compared with its previous expectation for a low-single-digit decline.

Earnings are also expected to remain largely flat over the same period.

That outlook has made it harder for investors to establish when the company's decline will finally reach a floor.

Sneaker data offers another warning

Fresh data from UBS provided another reason for caution.

UBS Evidence Lab data showed that secondary-market prices for Nike brand footwear fell 2.9% year over year in July.

That marked the third consecutive month of decline and represented a deterioration from the 1.7% decline recorded in June.

Jordan footwear performed no better. Prices fell 2.8% year over year in July, compared with a 2% increase in June.

UBS described the data as a "modest negative" for Nike and said secondary-market prices can serve as a useful proxy for brand momentum.

The figures suggest Nike has yet to achieve the inflection point investors are looking for.

The company needs to demonstrate that demand is stabilizing, new products are gaining traction and pricing power is returning before investors can become confident that a sustainable recovery is underway.

Instead, July's data showed Nike's decline deepening while Jordan moved back into negative territory.

China has become a major problem

Perhaps the biggest structural problem is China.

Nike's business in the country has declined for eight consecutive quarters, while its overall China operation has shrunk by roughly 30% since 2021.

Annual revenue in the market reached its lowest level in eight years at the end of May.

That represents a major reversal for a market that was once among Nike's most important growth engines.

China offered Nike a combination of rapidly expanding consumer demand, strong brand recognition and attractive margins.

Today, it has become one of the biggest obstacles to the company's global recovery.

The problem also appears to be more complicated than a temporary slowdown in consumer spending.

Young Chinese consumers are increasingly gravitating toward domestic brands as part of the "China Chic" movement.

Local labels have been able to offer products and marketing that are more closely tailored to Chinese tastes, while Nike has struggled to maintain the same cultural relevance.

“In a way, Nike has just become irrelevant,” said Yaling Jiang, the founder of consumer research firm ApertureChina and an expert on the Chinese consumer in a CNBC report.

Jiang said younger consumers may struggle to identify Nike's latest innovations, while Adidas has managed to generate more localized interest.

Nike is also attempting to simplify its distribution model in China, where its network has become increasingly complex and reliant on discounting.

Nike's outgoing finance chief Matt Friend was unable to give analysts a clear timeline for a return to growth in China during the latest earnings call, saying near-term revenue trends would remain broadly consistent with recent performance.

How Nike lost the World Cup to Adidas

Nike's renewed focus on sport was expected to receive a major boost from the FIFA World Cup, which was widely viewed as an important competitive battleground between Nike and Adidas.

Adidas sponsored 14 national teams in the tournament, while Nike sponsored 12, including England and France.

But none of Nike's teams reached the final, leaving Adidas with a significant marketing opportunity.

There were also operational problems.

According to Fortune, Nike failed to supply enough merchandise to many US stores ahead of the World Cup.

The incident raised concerns on Wall Street about the company's ability to forecast demand and move popular products into stores quickly enough.

For a company whose competitive advantage depends heavily on product launches, marketing and distribution, such execution issues are particularly damaging.

Wall Street is losing patience

The growing concerns have also started to show up in analyst ratings.

JPMorgan downgraded Nike to Underweight from Neutral, warning that the company's "Win Now" strategic initiatives could put pressure on future profitability.

That concern strikes at the heart of Nike's turnaround.

Rebuilding wholesale distribution, clearing excess inventory, investing in new products and restoring marketing momentum can help revive sales, but each initiative also carries costs.

Investors therefore need evidence that higher revenue will eventually translate into stronger margins.

“Nike’s problems are more deep-seated than previously acknowledged and, consequently, the turnaround is taking much longer than anticipated,” GlobalData managing director Neil Saunders wrote in a research note.

The resignation of Chief Accounting Officer Johanna Nielsen, effective September 4, 2026, has added another element of uncertainty.

CFO David Denton will serve as Interim Corporate Controller, creating an additional leadership transition as Nike attempts to execute one of the most important turnarounds in its history.

Nike still has scale on its side

Despite the problems, Nike's biggest advantage remains its enormous global scale.

The company generates roughly $46 billion in annual revenue, far exceeding the scale of rivals such as Lululemon Athletica, Under Armour and On Holding.

Hill's strategy is therefore less about reinventing Nike than restoring the strengths that made the company dominant in the first place: product innovation, performance footwear, sports marketing, wholesale distribution and broad consumer appeal.

The challenge is convincing investors that those strengths can once again translate into sustained growth.

For now, Wall Street is waiting for proof that the decline has bottomed.

UBS said Nike's stock is likely to improve once investors gain confidence that the company's growth rate has reached its low point and there is clearer visibility into a return to sustainably positive growth.

Monday's sell-off suggests investors are still waiting for that evidence.

For Nike, the problem is no longer simply recovering from a weak period. It is proving that the company's years-long strategic reset can produce meaningful growth before investors lose patience with the turnaround altogether.