Do you like Nike shoes so much that you also want to be an investor in the company? Well, before you "just do it", it's essential to have a background of Nike's stock and its business first. This page gives you a complete guide to understanding Nike as a company and how its stock should fit in your portfolio.
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Learn How to Buy Nike Stocks in 3 Easy Steps
Find a broker
Your broker provides you the trading platform, research, and other tools to help you trade stocks.
Analyze Nike’s chart
With your brokerage account's trading platform, you'll be able to see the fluctuations in Nike's stock price, which will then allow you to analyze it and form a trading strategy.
Once you've conducted your analysis and determined the likely direction of Nike's stock price, place your order on your trading account and see how it goes.
Nike Company Overview
Nike is the world's largest footwear company with $37.42 billion in revenues in 2020. It is also among the 500 most valuable companies, according to Fortune magazine, with a current market value of $212.7 billion.
Aside from footwear, Nike also makes apparel, equipment, and accessories and offers its brand products in different categories, including Nike basketball, the Jordan brand, football, training, and sportswear.
The company is headquartered in Beaverton, Oregon, and is headed by PayPal chairman John Donahoe.
Nike Business Model and Revenue Streams
Nike derives its revenue primarily from one source: the sale of its products. But its aggregate total is derived from three main categories, Nike brand, Converse, and Corporate. Its Nike brand makes up 96% of its revenue, but this is subdivided into different product lines: footwear, apparel, and equipment.
Its footwear products make up 64%, which is led by its ever-popular Jordan brand. Its apparel category is 32% of its sales, and Nike equipment is around 3%.
Its other shoe brand, Converse, is about 4% of the total revenue, while its Corporate segment is only 0.2%.
History of Nike
Nike was founded by Phil Knight and Bill Bowerman in 1964 and was originally known as Blue Ribbon Sports (BRS). Back then, it distributed shoes for Japanese shoemaker Onitsuka Tiger.
Seven years later, it cut ties with Onitsuka Tiger and started manufacturing its own shoes. It changed its name to Nike, which it took from the Greek goddess of victory. Its swoosh logo also made its first appearance in June that year.
In 1972, Nike landed its first athlete endorser, Romanian tennis player Ilie Nastase. By 1980, Nike already controlled half the U.S. athletic shoe market share and filed its IPO in the same year at 18 cents a share.
In 1984, it was able to land perhaps its most valuable endorser in NBA legend Michael Jordan, which many people credit as a pivotal moment that gave rise to today's sneaker culture. In fact, to this day, the Jordan brand earns more than the signature Nike shoes of contemporary players.
Nike also made several acquisitions as its popularity continues to grow along with its sales. One of its notable deals is its $309 million purchase of then 95-year old shoemaker Converse, which, as stated, is one of its revenue sources.
The company also acquired Umbro, Starter, Hurley International, and others, but most of these are already sold as of date, and the only remaining subsidiary is Converse.
Phil Knight stepped down as the company's CEO in 2004 but remained as chairman until 2016. William D. Perez was his successor. In 2012, Nike became the official NFL apparel, and in 2015, the official NBA apparel.
Before John Donahoe, Mark Parker took the helm from Perez in 2006 and served as the president and CEO of Nike until 2019.
Last year, despite the pandemic, the company's annual revenue was down only 4.3%, and its stock price appreciated by about 38%.
Brokers That Offer Nike Shares
Here is our list of the top brokers offering Nike stocks. These companies are the few ones we think have the best support and trading tools to give you a great trading experience.
Should I Invest in Nike Stock?
Perhaps the two most compelling reasons to invest in Nike is that it remains the market leader in the global sports footwear industry, and its business performance continues to improve year in and year out.
Last year, Nike led against its competitors in annual sales by a wide margin. For comparison, its closest rival, VF Corporation, only produced $12.3 billion in total sales. Even UnderArmour, whose top endorsers include Stephen Curry, Tom Brady, and Michael Phelps, only generated $5.2 billion.
And in terms of business performance, Nike's revenue grows each year at a 5.7% rate, and a lot of this is attributed to its digital sales momentum. Because even before the pandemic hit, the company had already invested in a platform that furthers its digital aspirations.
Nike Stock Investment Potential
The company is also doing well financially and currently sits on $8.3 billion in cash, which affords it more leverage for creating demand for its products. And with its already commanding position, an extensive budget to work on would help solidify its brand's superiority in the sneaker race.
This would make a bet in Nike still profitable in the long run. Nike trades right now at $135, as of writing, and over the last five years, the stock's annual growth rate is 16.91%. Aside from its growth potential, the company is also a great dividend stock and had recently raised its dividend rate for the 19th consecutive year to $1.10 a share -- a 12% hike.
What Kinds of Investors Should Include NIKE in Their Portfolios?
There is a reason why mutual fund companies own the majority stake in NIKE, and this is because the stock offers them steady but consistent returns over time. As mentioned, NIKE continues to improve its revenues annually (except in 2020), and its stock price has followed suit. Its dividend rate is also growing every year, which provides another income stream for investors.
Therefore, investors of NIKE benefit from the stock being a reliable long-term component of their portfolio.
How Much Should I Invest in Nike
Now, the big question is how much you should invest? Well, that really depends on how much of your portfolio you'd want to be exposed in the stock. It's very likely that Nike won't provide you with astronomical returns in a short period. So, if that's not how you see it panning out, and you'd want quicker returns, you could opt for more of a growth stock and possibly choose an investment amount in Nike that balances out your portfolio.
How to Buy Shares in Nike Stock?
Before you start trading Nike shares, you first need to get your brokerage account set up. There will be an online application form that you need to fill-up and submit. After that, your account will undergo a verification process, usually taking a few business days.
You'll receive a notification once your account is approved, and from there, you can proceed with the funding. Usually, brokers offer electronic bank deposits, wire transfers, check, and account transfers from another firm. Choose the one that applies to you. If your main concern is the processing time, then the quickest option to see your funds in your account immediately is with electronic transfers.
Finally, when you see your deposit reflect in your account balance, you're ready to place your first Nike trade.
Buy Nike Shares Using a Broker
An online broker is the best option if you're taking the DIY investing path, but there are a few things you need to provide to get your account verified.
As stated earlier, you have to accomplish an online application form, and would typically need to supply identity proof, such as your Social Security Number (SSN), passport, driver's license, etc.
Also, your broker could request proof of income and employment details. This is standard among regulated brokers as this is required for them to comply with anti-money laundering and anti-terrorist financing mandates.
Buy Nike Shares With a Direct Stock Purchase Plan (DSPP)
A Direct Stock Purchase Plan (DSPP) is an alternative way to invest in stocks. This method doesn't require an intermediary (broker) to facilitate the purchase of a company's shares but allows you to invest directly in the company. However, a DSPP requires an initial setup fee and an initial investment amount.
Nike's DSPP has an initial setup fee of $10 and an initial investment of $500. And each month, you can opt to make an ongoing investment of at least $50. But once you reach the $250,000 limit, the only option to purchase more shares is to go for a broker.
Frequently Asked Questions
At its current trading price of $133.41, analysts estimate a 2021 upside potential of at least 17%.
Nike is a consistently profitable company with an average net margin of 9.26% over the last five years.
Nike's stock price moves approximately $3.66 per day, with 5.96 million shares trading daily. Therefore, there is an opportunity to profit from its volume and volatility.
The trading platform that is best for trading Nike shares should provide a complete set of analysis tools that executes trades in a short time.
Trading Nike follows the standard trading hours in the U.S. (9:30 am to 4 pm ET).
Nike’s shares are listed on the New York Stock Exchange (NYSE) under the symbol NKE.