Nike Stock: Why It Fell 79% and What’s Next After the S&P 100 Exit

Nike is leaving the S&P 100 after almost 18 years, but the index decision did not cause the collapse in Nike stock. It is the result of it. A business once valued as an almost flawless growth company is now being priced as a difficult turnaround after weaker innovation, a disrupted wholesale network, falling digital sales, deep problems in China and a sharp decline in profitability.

Let’s break down what Nike’s S&P 100 exit means, why the stock has fallen 78.6% from its 2021 high and whether the lower valuation offers opportunity or simply reflects risks that have not yet peaked.

Nike’s S&P 100 exit explained

S&P Dow Jones Indices announced on 4 September 2026 that Nike will be removed from the S&P 100 before trading opens on 21 September. Palo Alto Networks will take its place. Dell Technologies, Arista Networks and Sandisk are also entering the index while Honeywell Aerospace, Simon Property Group and Colgate-Palmolive will leave.

The S&P 100 is a group of 100 major US blue-chip companies selected from the broader S&P 500 universe. S&P said the changes were intended to make each index more representative of its market-capitalization range.

The distinction matters. Nike is not being delisted and most money tracking the much larger S&P 500 is not being forced to sell it. The change says that Nike is no longer representative of America’s 100-company mega-cap tier. It does not say that the company has become uninvestable.

How much forced selling could the index exit create?

The iShares S&P 100 ETF, ticker OEF, is the clearest publicly visible pool of index-linked capital. BlackRock reported fund assets of about $20.45 billion on 4 September. Its 31 August holdings file showed a 0.10% Nike weight, equal to about $19.6 million or 506,524 shares.

For perspective, approximately 20.6 million Nike shares traded on 4 September. OEF’s disclosed Nike position was therefore equal to roughly 2.5% of one normal day’s share volume.

This does not capture every separate account, derivative or institutional product tied to the index. It does show why investors should not automatically treat the deletion as a massive mechanical sell event. The symbolism is bigger than the directly observable ETF flow.

There is also no clean regular-session reaction to measure yet. The change was announced on 4 September and the US market was closed on 7 September. Nike had closed 4 September at $38.40, down 0.95%, but attributing that session’s move to an announcement whose market timing is not established would be misleading. The first full regular session after the news is 8 September.

Has Nike stock really fallen nearly 80%?

Yes, on an unadjusted share-price basis.

Nike reached an intraday record of $179.10 on 5 November 2021. From that level to $38.40 on 4 September 2026, the decline is:

($38.40 ÷ $179.10) - 1 = -78.6%

The stock was also only about 1% above its latest 52-week low of $37.95, reached on 3 September 2026. Nike’s market value stood near $56.9 billion, roughly 80% below the approximately $281 billion valuation associated with its 2021 peak.

The 78.6% figure excludes dividends. A total-return calculation would show a slightly smaller loss because Nike paid dividends during the period. For a headline about the stock price itself, however, “nearly 80%” is accurate when the unadjusted record high is used.

Why Nike stock has fallen: The two-part collapse

The cleanest way to understand Nike’s fall is to split it into two forces. Earnings weakened and investors stopped paying a premium multiple for those earnings.

At the 2021 high, Nike’s $179.10 share price was about 50 times FY21 diluted EPS of $3.56. At $38.40, the stock trades at roughly 24 times FY26 underlying EPS of $1.58, which excludes a one-time tariff recovery.

The effects multiply rather than add. Nike now earns about 44% of its FY21 EPS and investors are paying about 48% of the former valuation multiple. Multiplying 44% by 48% leaves the stock at roughly 21% of its old value, which explains the 79% drawdown.

This is the central investment lesson. Nike’s fall is not only a story of investor pessimism. A large part of the old earnings power also disappeared.

How Nike’s direct-to-consumer strategy weakened the business

Nike’s earlier strategy prioritized its own stores and digital channels. In theory, selling directly to consumers gives a brand more customer data, better control of the experience and a larger share of the retail price.

The problem was execution. Nike reduced its dependence on wholesale partners just as specialist retailers remained important places for shoppers to discover, compare and try performance footwear. Rivals gained shelf space and consumer attention while Nike relied heavily on established lifestyle franchises and digital promotions.

By FY26, management was rebuilding the relationships it had previously de-emphasized.

Wholesale growth is a useful early sign. Nike refreshed more than 15,000 spaces in wholesale doors during FY26 and said its revenue growth and retail sales with Foot Locker turned positive for the first time in four years during the fourth quarter.

Still, wholesale recovery is not automatically high-quality growth. Sending more products to retailers may lift reported revenue before consumer demand has fully recovered. Investors should watch sell-through, full-price sales and future orders, not sell-in alone.

Nike’s product problem is bigger than one slow category

Nike’s performance categories are improving, but its largest lifestyle businesses remain weak. Management said performance products grew at a mid-single-digit rate in FY26. Nike Running delivered five consecutive quarters of double-digit growth and added roughly $1 billion of business over that period.

The difficulty is scale. Nike Sportswear and Jordan Streetwear together represent approximately half of company revenue. Both are expected to remain negative in FY27, with improvement anticipated only in the second half.

This creates a “fast boat, slow ocean” problem. Running can grow quickly but it cannot immediately offset weakness across businesses that account for half of Nike’s sales. A genuine turnaround requires new products to broaden beyond running into training, basketball, sportswear and Jordan.

Nike plans to introduce more than a dozen new Sportswear footwear styles in the second half of FY27. Product announcements will not be enough. The proof will be rising full-price sales without a return to heavy discounting.

Why China remains Nike’s hardest turnaround

Greater China was once one of Nike’s most dependable growth engines. In FY21, revenue from the region was $8.29 billion after seven consecutive years of double-digit currency-neutral growth. By FY26, revenue had fallen to $5.85 billion, a decline of almost 30% in five years.

Inventory reduction and lower average discounts are signs of cleanup. Running grew at a mid-single-digit rate in Greater China during Q4 while football and tennis grew by double digits. Yet the overall decline shows that Nike is still losing more in broad lifestyle demand than it is gaining in performance niches.

Local competitors such as Anta and Li-Ning are stronger than they were five years ago while global challengers such as On and Hoka have made performance footwear more fragmented. Nike must restore local relevance, product newness and premium pricing at the same time. That is much harder than simply reopening distribution.

Nike’s FY26 results look better until the one-time benefit is removed

Nike reported FY26 revenue of $46.4 billion, flat in dollars and down 2% on a currency-neutral basis. Reported gross margin edged up 20 basis points to 42.9% while diluted EPS fell 3% to $2.10.

Those figures include a $986 million expected recovery of IEEPA tariffs recognised in Q4. Nike said the benefit added about 210 basis points to full-year gross margin and $0.52 to EPS.

The underlying numbers are the better starting point for valuation because a refund of previously paid tariffs is not recurring operating profit. In FY21, Nike’s operating margin was approximately 15.6%. The underlying FY26 level of about 6.1% shows how much earnings power has been lost to discounting, product mix, supply-chain costs and an inefficient operating base.

Nike also held $9.0 billion of cash and short-term investments against about $7.9 billion of interest-bearing debt at 31 May. This is not a balance-sheet survival story. It is an earnings-quality and growth-recovery story.

Is Nike stock cheap after a nearly 80% fall?

The answer depends on which earnings number is used.

At $38.40, Nike trades at about 18.3 times reported FY26 EPS of $2.10. That looks inexpensive relative to the roughly 50 times earnings investors paid near the 2021 peak. However, reported EPS includes the $0.52 tariff-recovery benefit. On underlying EPS of $1.58, the multiple is closer to 24.3 times.

The market value of $56.9 billion is also about 1.2 times FY26 revenue. That is far below Nike’s peak valuation but sales multiples become less meaningful when margins are unstable.

The dividend deserves the same adjustment. FY26 dividends declared were $1.63 per share, equal to a historical yield of about 4.2% at the latest price. The payout consumed about 78% of reported EPS and slightly more than 100% of underlying EPS. Nike has liquidity to support the dividend but sustained dividend growth becomes harder unless underlying profit recovers. The company spent only $123 million on share repurchases in FY26 compared with $2.4 billion on dividends.

So Nike is cheaper, but it is not obviously cheap on depressed underlying earnings. Investors are already paying for some recovery.

A simple valuation framework for Nike stock

Instead of choosing one target price, investors can ask what revenue, operating margin and valuation would be required under three possible outcomes. The model below is illustrative, not a company forecast.

The approximate EPS figures assume about 1.48 billion diluted shares, a low-20% tax rate and limited net interest drag. The bear case assumes that weak China and Sportswear demand keep margins near current levels. The base case requires modest sales recovery and meaningful margin repair. The bull case requires Nike to approach its former revenue peak and restore much of its historical profitability.

The wide range is the point. At the current price, Nike offers turnaround upside but not a large margin of safety if underlying EPS remains around $1.50 to $1.60.

What is improving at Nike?

Nike’s turnaround under CEO Elliott Hill is not without evidence.

• Performance products grew at a mid-single-digit rate in FY26.
• Nike Running has delivered five consecutive quarters of double-digit growth and added about $1 billion of revenue over that stretch.
• Wholesale revenue rose 4% currency-neutral for FY26.
• North America FY26 revenue grew 5% while Q4 wholesale increased 10% currency-neutral.
• Nike reduced classic footwear franchises by more than $2 billion during FY26.
• Greater China inventory fell by double digits in Q4 while average discounts declined.
• Management is tightening purchases, simplifying the supply chain and redirecting resources toward sport-led teams.

Leadership is also changing. David Denton became chief financial officer on 17 August 2026. Jane Ewing, previously interim CEO of Sam’s Club China, became Nike’s chief commercial officer effective 7 September. She will oversee global sales and Nike Direct. These appointments increase accountability around capital allocation, marketplace execution and the China recovery.

Nike’s Investor Day on 16 and 17 November 2026 is the next major opportunity for management to provide longer-term financial targets and define what a successful recovery should look like.

What could still go wrong for Nike investors?

Revenue may recover later than margins

For the early part of FY27, management expects revenue to decline by a low-to-mid-single-digit percentage. Tightening inventory and reducing promotions can improve margins while lowering near-term sales. Investors should not mistake one quarter of margin expansion for a complete demand recovery.

Half the company is still under pressure

Sportswear and Jordan Streetwear represent approximately half of revenue and are expected to remain negative during FY27. Strong running growth cannot carry the whole company indefinitely.

China may need a deeper reset

Full-year Greater China revenue fell 13% currency-neutral and Q4 fell 17%. Lower promotions protect the brand but can initially reduce volume. Nike must rebuild desirability rather than merely restrict discounts.

Tariffs and macro pressure can delay profitability

Nike’s June outlook assumed incremental tariff rates of 10% through July and 15% thereafter. Oil prices, Middle East disruption, currency movements and pressure on discretionary spending could also affect costs and demand.

A lower share price does not guarantee a low valuation

The stock has lost almost four-fifths of its value but still trades near 24 times underlying FY26 earnings. If earnings fail to recover, the multiple can compress again.

What should investors track next?

Investors assessing Nike against other consumer discretionary stocks should watch a short list of operating indicators rather than daily index-related volatility.

Nike stock outlook after the S&P 100 exit

The S&P 100 deletion is not the reason to sell Nike and it is not a reason to buy it. It is a delayed recognition of a smaller market value after five years of operational mistakes and profit erosion.

Our view is cautious, with a watchlist bias rather than an automatic contrarian buy. Nike still has a globally recognised brand, strong liquidity, improving running momentum and a wholesale recovery that could rebuild distribution. The current valuation also offers substantial upside if operating margin moves back toward double digits.

However, the stock is not priced like a no-growth liquidation. At roughly 24 times underlying FY26 EPS, it still assumes that management can restore meaningful earnings. China remains deeply negative, Nike Direct is shrinking, Sportswear and Jordan Streetwear are weak and the FY26 profit base was flattered by a one-time tariff recovery.

For existing long-term shareholders, the most important question is not whether Nike re-enters the S&P 100. It is whether full-price demand, revenue growth and underlying operating margin improve together. For new investors, waiting for at least two of those three signals may sacrifice the exact bottom but materially reduce the risk of buying a famous brand before its financial recovery is real.

Key takeaways for investors

• Nike will leave the S&P 100 before trading opens on 21 September 2026 but will remain in the S&P 500, the Dow and on the NYSE.
• The stock has fallen 78.6% from its unadjusted November 2021 peak while market value has declined by about $224 billion.
• The fall reflects both a 55.6% decline in underlying EPS versus FY21 and a valuation reset from about 50 times to 24 times earnings.
• FY26 revenue was $46.4 billion but underlying EPS was only $1.58 after excluding a $0.52 tariff-recovery benefit.
• Running and wholesale are improving but China, Nike Direct, Sportswear, Jordan Streetwear and Converse remain major pressure points.
• The directly observable forced selling from the largest public S&P 100 ETF appears modest relative to Nike’s daily trading volume.
• At $38.40, Nike offers a large turnaround upside but still requires better margins and demand to justify its valuation.