Nike Inc (NYSE:NKE) had a rough 2016. Nike stumbled out of the blocks with a weak revenue number in its March 2016 report, and followed that up with another weak revenue number in the June 2016 report. It had become clear that Nike’s super-high 2015 popularity was fading, and NKE stock fell with it. After hitting an all-time high in late 2015, the stock stumbled early in 2016 and ended the year shedding almost 20% of its value.
But the company, and Nike stock, look to be at an inflection point right now. The company’s stock has shown some signs of life this year, and shares look ready to rocket higher over the next several months.
Nike Stock: Taking Back Market Share
At the heart of Nike’s 2016 decline were other athletic apparel retailers eating market share. Lululemon Athletica Inc. (NASDAQ:LULU) surged to the forefront of the yoga apparel world. Under Armour Inc (NYSE:UA, NYSE:UAA) was still riding the Stephen Curry MVP wave to the tune of 30% revenue growth rates. The once ailing Adidas AG (ADR) (OTCMKTS:ADDYY) used retro styles to revitalize its brand among the trend-following Millennial generation. Even the often forgotten Skechers USA Inc (NYSE:SKX) was looking at sizzling 25%-plus revenue growth rates early in 2016.
Amid this athletic retail spend surge, Nike’s growth rates remained little changed in the mid-to-high single-digit range. So investors ditched boring NKE stock in 2016 to follow the exciting upstart trend.
But the Lululemon growth story is now slowing. Under Armour is reeling. Skechers’ growth rates have fallen 5%. The Adidas resurgence story still remains on track, but now the other super trendy athletic apparel companies have seemingly fallen off the trend.
Nike, though, is still growing revenues at a mid-to-high single-digit range. They also look like a lock to do that next year. And the year after that. Its this sort of consistency that investors are finding attractive in this current retail tailspin environment.
Click to Enlarge Moreover, it looks like NKE is perfectly positioned to steal back the market share it lost in 2016. According to Piper Jaffray’s Taking Stock With Teen Survey, the company’s mind-share among the trend-following Millennial generation is at a three-year high.
The last time Nike was this popular among trendy consumers was in 2015. Perhaps not by coincidence, NKE stock was up more than 30% in 2015.
Nike Basketball Is Back
One of the biggest markets to slip for the company in 2016 was basketball. Under Armour, spearheaded by an MVP campaign from superstar guard Stephen Curry, ate into the basketball pie, which had traditionally belonged almost entirely to Nike.
But that dynamic, too, is starting to flip.