Nike Gains 4% on Ackman’s Return
Nike Inc. (NYSE:NKE) saw its shares rise nearly 4% on Thursday, driven by investor optimism following the return of billionaire investor William Ackman as a stakeholder. Ackman’s hedge fund, Pershing Square Capital Management, now holds approximately 3 million Nike shares, representing a stake of about 0.19%, according to a filing made on Wednesday. Although Ackman has not yet disclosed any specific plans for this investment, his involvement is seen as a potential catalyst for a turnaround at Nike.
Ackman is expected to have a significant influence on Nike’s executive team, potentially helping to address recent strategy missteps and intensifying competition. Brian Mulberry, a client portfolio manager at Zacks Investment Management, which held $25.79 million worth of Nike shares as of June, noted that Ackman’s presence could help steer Nike back on track.
Challenges and Potential for Change
Nike’s stock has declined nearly 30% this year, and the company has forecast a drop in annual sales for fiscal 2025. This performance has led to speculation about a possible management shake-up, including the potential departure of CEO John Donahoe. Art Hogan, chief market strategist at B Riley Wealth, commented that activist investors often aim to replace top executives, referencing recent industry moves such as Starbucks’ hiring of Chipotle CEO Brian Niccol to rejuvenate growth.
Ackman’s previous involvement with Nike in late 2017, during a period when Nike was losing market share to Adidas, ended in 2018 with a profitable exit. His return is seen as a strategic move that might prompt further changes at Nike.
Analysts and investors suggest that it might be early for Ackman’s influence to be fully felt, and he may need to acquire a larger stake to drive significant impact. Currently, Nike’s forward price-to-earnings ratio for the next 12 months stands at 24.26, compared to Adidas’ 36.75, indicating room for strategic adjustments.
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