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The Real Loser in the Nike-Kaepernick Hullabaloo

Nike will be fine, as will shareholders, but the public is still waiting for direction

By James Brumley, InvestorPlace Feature Writer

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The Real Loser in the Nike-Kaepernick Hullabaloo

Source: Kristian Olsen Via Unsplash

Most people are generally neutral about most matters in life. The recent decision from sports apparel brand Nike (NYSE:NKE) to feature controversial ex-NFL quarterback Colin Kaepernick in its newest ad campaign, however, is one most everyone has a strong opinion about. That includes owners of Nike stock, who sent shares uncomfortably lower the day the campaign was first unveiled.

And, to be fair, the veracity of the debate is understandable. Not that it’s rampant, but some police officers are unnecessarily aggressive. Conversely, though everyone in the United States has a right to free speech, no one is guaranteed the right to speak and act without consequences.

There’s an unfortunate (and largely unrecognized) victim of the melee though. That is, the social causes Kaepernick was fighting for — regardless of the approach — have been completely shoved out of sight and out of mind.

Uncertain Terms

On the off chance you’re reading this and don’t already know, last week, Nike unveiled the first look at its newest endorsement deal. Kaepernick, best known for kneeling during the playing of the National Anthem as a means of bringing attention to racial injustice, is the face behind a simple message: “Believe in something, even if it means sacrificing everything. Just do it.”

Kaepernick’s sacrifice, above all else, was a spot on any NFL team’s roster.

Perhaps it was worth it. Nobody will argue that the athlete doesn’t turn heads now to point to whatever cause he chooses. Nike’s synced up with that publicity firepower, perhaps embellishing it, or perhaps taking control of it in a way that serves its purposes.

And, perhaps it was worth it to Nike as well. Although Nike stock slumped in response to the new advertisements and hordes of Nike customers chose to publicly destroy their Nike merchandise vowing to never buy Nike goods again, online sales of Nike goods reportedly jumped 31% in the days following the launch of the new campaign. Clearly some consumers are on board with the idea.

Yet, if the whole idea was to further align themselves with a particular cause, the public is still wondering exactly what that cause is.

The point and purpose of Kaepernick’s kneeling — an action that many other NFL players mirrored — was to protest oppression of minorities. It’s clearly a worthy cause. The vast majority of America is against racism of any kind. It was never clear exactly what Kaepernick wanted the public to do, however, nor was it clear exactly what he was ultimately pointing to. No statistics. No directions. No compelling argument to support a specific call to action, despite the fact that he had the nation’s attention.

That’s not to suggest the professional athlete did nothing. He was willing to talk about his cause, on camera, to anyone who asked. He was also a significant financial contributor in the fight against racial injustice.

The ambiguous effort, however, simply lacked a specific call to action.

The relationship with Nike could have changed that, and maybe it will. Certainly, the apparel company has an experienced publicity arm that can connect the still-unemployed Kaepernick with groups and individuals that can advance a cause — if that’s Nike’s (at least secondary) goal. If Nike is also looking to fight oppression, though, it isn’t exactly making a clear case yet either.

Perhaps that will change going forward. Yet, the company supports a variety of charitable efforts and good causes most people don’t know about. If Nike hasn’t effectively promoted them, can Kaepernick’s cause fare any better?

The world is now watching… again. It remains to be seen if the endorsement deal will lead the public to a “here’s the problem, and here’s what you can do” moment.

Bottom Line for Nike Stock

As for the long-term impact on Nike stock, truth be told, the net-effect will likely be nil when all is said and done. In the interim, though, as consumers and the company adjust to a jarring few days, rivals like Under Armour (NYSE:UAA) and Adidas (OTCMKTS:ADDYY) stand to gain. And that’s happening at a time when Nike was losing market share anyway.

Nike’s international focus could prove unfettered by the controversial development, but as most owners of Nike stock know, Nike isn’t exactly firing on all cylinders overseas either.

NKE stock has since halted its decline, never letting the Kaepernick-prompted selloff take much hold. Somehow, though, it feels like Nike shares are going to have to move measurably lower before moving meaningfully higher again as the market further digests the whole story.

Drama is rarely a good thing in the short run.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.


Article printed from InvestorPlace Media, https://investorplace.com/2018/09/real-loser-nike-kaepernick-hullabaloo/.

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