Nike Gains 4% on Ackman’s Return

Nike Inc. (NYSE:NKE) saw its stock price increase by nearly 4% on Thursday, fueled by investor optimism following the return of billionaire investor William Ackman as a shareholder. Ackman’s hedge fund, Pershing Square Capital Management, currently owns roughly 3 million Nike shares, representing a stake of about 0.19%, according to a filing from Wednesday. While Ackman hasn’t revealed any specific plans for this investment yet, his involvement is viewed as a potential catalyst for a turnaround at Nike.

Ackman is anticipated to have a significant influence on Nike’s executive team, potentially contributing to addressing recent strategic 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, mentioned that Ackman’s presence could help guide Nike back on track.

Challenges and Potential for Change

Nike’s stock has experienced a decline of nearly 30% this year, and the company has projected a drop in annual sales for fiscal 2025. This performance has sparked speculation about a possible management shake-up, including the potential departure of CEO John Donahoe. Art Hogan, chief market strategist at B Riley Wealth, remarked that activist investors frequently aim to replace top executives, citing recent industry moves such as Starbucks’ hiring of Chipotle CEO Brian Niccol to revitalize growth.

Ackman’s prior 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 trigger further changes at Nike.

Analysts and investors suggest that it might be premature 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.