How to Buy Nike Stock in 2022
Nike is one of the top companies in the apparel industry. Enjoying worldwide brand recognition, this company may be an excellent addition to your portfolio. If you are interested in buying Nike stock, it's essential to check out the following sections. This article provides a detailed insight into the business, how to buy stocks, and whether Nike is a suitable investment for you.
Learn How to Buy Nike Stocks in 3 Easy Steps
Find a Broker
Many online brokers can help you access the financial market. Before you start trading Nike shares, you need to get your brokerage account set up. There will be an online application form that you need to submit. After that, your account will undergo a verification process, usually taking a few business days.
Analyse Nike’s Chart
Once your account is verified, you will have access to numerous stocks. The brokerage platform will also provide multiple analysis tools and charts. These will show you the historical share prices, current performance, daily volatility, and many more. You need to analyse these charts to find out if Nike is a suitable investment for your strategy and decide when it’s the right timing for your trade.
Once you've conducted your analysis and determined the likely direction of Nike's stock price, you need to make sure your account is funded. Brokers provide numerous payment methods, so you can choose the one that is most convenient for you. When your trading account is topped up, you can now place your order to buy shares in the company.
Nike Company Overview
Nike enjoys worldwide recognition as one of the most popular footwear companies. Let’s find out more about how it generates revenue and its history.
Nike Business Model and Revenue Streams
Headquartered in Beaverton, Oregon, and headed by PayPal Chairman John Donahoe, Nike is the world's largest footwear company with $37.42 billion in revenues in 2020. According to Fortune magazine, it is also among the 500 most valuable companies, with a current market value of $212.7 billion.
Aside from footwear sales, Nike generates revenues from producing and selling apparel, equipment, and accessories and offers its brand products in different categories, including Nike basketball, the Jordan brand, football, training, and sportswear. The main revenue stream is derived from three categories: the Nike brand, Converse, and the corporate segment. 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. The 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 the 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 a 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, inspired by 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, the Romanian tennis player Ilie Nastase. By 1980, Nike already controlled half of the U.S. athletic shoe market share and filed its IPO in the same year at $0.18 per share.
In 1984, it landed one of its most valuable endorsers, the NBA legend Michael Jordan, which many people credit as a pivotal moment that led to today's sneaker culture. In fact, to this day, the Jordan brand earns more than the signature Nike shoes of contemporary players.
Nike has also made several acquisitions as its popularity continues to grow along with its sales. One of its notable deals is the $309 million purchase of then 95-year old shoemaker Converse, which, as stated, is one of its primary revenue sources. The company also acquired Umbro, Starter, Hurley International, and others, but most of these are already sold as of this 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 supplier of NFL apparel, and in 2015, the official NBA supplier.
Before John Donahoe, Mark Parker took the helm from Perez in 2006 and served as Nike’s CEO until 2019. In 2020, despite the pandemic, its 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 hand-picked to provide 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 significantly. Let’s find out more about its investment potential and how much you should invest in this company to help you decide if it’s a good pick for your portfolio.
Nike Stock Investment Potential
Last year, Nike led 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, generated only $5.2 billion.
In terms of business performance, Nike's revenue grows each year at a 5.7% rate, and most of this is attributed to its digital sales momentum. Even before the pandemic hit, the company had already invested in a platform that furthers its digital aspirations.
The company performs well financially and currently sits on $8.3 billion in cash. With its already commanding position, this extensive budget helps solidify its brand's superiority in the sneaker race.
This would indicate Nike remaining profitable in the long run. Nike trades right now at $135, as of this writing, and the stock's annual growth rate is 16.91% over the last five years. Aside from its growth potential, the company is also a great dividend stock and has recently raised its dividend rate for the 19th consecutive year to $1.10 a share, representing a 12% increase.
What Kinds of Investors Should Include Nike in Their Portfolios?
There is a reason why mutual fund companies own the majority stake in Nike. This is because the stock offers them steady but consistent returns over time. As mentioned, the company continues to increase 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 long-term investors. Therefore, it might be a suitable stock for long term investors looking for a reliable asset for their portfolio.
How Much Should I Invest in Nike?
How much you should invest in Nike depends on your investment strategy. For instance, it’s highly likely that Nike will not provide high returns in a very short period, but it’s instead a more stable, less risky addition to your portfolio. As a result, if you have a lower risk tolerance and want a stable stock, you could choose to invest money in Nike to balance out your portfolio.
How to Buy Shares in Nike Stock?
There are two main methods to buy shares in Nike stocks, as described below. The most popular way is to open an account with a brokerage firm. Alternatively, you can opt for a Direct Stock Purchase Plan (DSPP). Let’s find out more about these two investment methods.
Buy Nike Shares Using a Broker
An online broker is the best option if you're taking a customised investing path, but there are a few things you need to provide to get your account verified. As stated earlier, you have to fill in an online application form and upload identity proof, such as your Social Security Number (SSN), passport, or driver's license.
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 policies and other regulations.
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, and account transfers from another firm.
If your main concern is the processing time, then the quickest option to see your funds in your account immediately is via electronic transfers. Finally, when you see your deposit reflect in your account balance, you're ready to place your first Nike trade.
You can choose to place a market order or a predetermined limit order to buy your first nike shares.
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 a minimum initial investment amount.
Nike's DSPP has an initial setup fee of $10 and an initial investment of $500. Each month, you can opt to make an ongoing investment of at least $50. Once you reach the $250,000 limit, the only option to purchase more shares is through a brokerage firm.
Frequently Asked Questions
At its current trading price of $133.41, analysts estimate a 2021 upside potential of at least 17%. This might be a great opportunity this year as long as it fits in with your expected return and risk.
Nike is a consistently profitable company with an average net margin of 9.26% over the last five years. It is also a market leader and enjoys worldwide brand recognition.
Nike's stock comes with a large trading volume of 5.96 million shares daily. Therefore, there is an opportunity to profit from its volume and volatility. At the same time, you can opt for longer-term investment and earn dividends.
The best trading platform for Nike should provide a complete set of analysis tools to help you trade in a short time. It should also be user-friendly, easy to use, and have excellent customer support if you need assistance.
Trading Nike follows the standard trading hours, from 9:30 A.M. to 4 P.M (ET), Monday to Friday.
Nike’s shares are listed on the New York Stock Exchange (NYSE) under the symbol NKE.