To The Moon

About Nike 

$Nike(NKE)$ Nike Inc. (NYSE:NKE) is a multinational corporation based in Beaverton, Oregon, USA, with operations in over 190 countries. The company designs, develops, and sells athletic footwear, apparel, equipment, and accessories. The brand is renowned for its high-quality products, and it's no surprise that it's among the most recognizable and valuable brands globally.

Founded in 1964, Nike has grown to become one of the largest and most successful athletic apparel companies in the world. The athletic apparel industry is highly competitive, and Nike's major competitors are Under Armour, Puma, Adidas, and Lululemon. These companies have also experienced growth in the past few years, with Puma and Lululemon outperforming Nike in terms of stock growth. However, Nike has been able to maintain its dominance in the market despite increased competition.

Nike to Benefit from Adidas Split with Kanye West?

Adidas has experienced a decline in sales following their split with rapper and designer Kanye West. This split has reportedly caused Adidas to lose about $600 million in quarterly sales, and the company has announced plans to slash its dividend. Nike is expected to benefit from Adidas' split with West. Nike is projected to see a rise in third-quarter revenue and grow its market share through 2023, thanks in part to the split.

However, it should be noted that the search results provide a limited snapshot of the situation and that the long-term effects of the split on both companies remain to be seen.

Recent Stock Performance

Nike's stock has been on a steady rise since bottoming out in October 2022. As of March 2023, Nike shares have rallied roughly 59% to their recent high at 131.31. This can be seen as trending with the broader market, which also recovered substantially from the September 2022’s low. However, in my opinion, I am not expecting the share price to move higher following the earnings after the closing bell today. The market has already factored in Nike's performance, and the stock may suffer a correction. Based on the day chart below, the support level should be around 115 and 103 with the resistance level around 129. 

My Trading Plan

Today: I am looking to buy the put option at the strike price of 129 $NKE%2020230331%20129.0%20PUT$ $NKE 20230331 129.0 PUT$  today in anticipation of a soft guidance from the earnings report. With the recent stock rally and high expectations from investors, it is likely that the market has priced in a positive earnings report, leaving little room for upside surprises. However, if the earnings report is weaker than expected, the stock price could fall sharply, making put options an attractive trading opportunity.

Tomorrow: If the stock price drops tomorrow in reaction to the earnings, I will be looking for a bargain such as buying call option at the strike price of 103 $NKE%2020230331%20103.0%20CALL$ $NKE 20230331 103.0 CALL$  if the market overacts to a dismal earnings report. In the event of a sharp decline in the stock price, it is possible that the market overreacts, leading to an oversold situation. If this happens, I would look for a buying opportunity in the form of call options, which would allow me to profit from a potential rebound in the stock price. However to avoid unexpected volatility, I will try to close my positions before the 2pm announcement of Federal Reserve Interest rate decision.

In addition to monitoring the stock's performance, I will pay close attention to how strong or weak the overall market is while trading large-cap stocks such as Nike. The broader market can have a significant impact on individual stocks, and a weak market could amplify any negative news about Nike's earnings report.

Conclusion

In conclusion, the recent split between Adidas and Kanye West is expected to benefit Nike, with projected revenue growth and market share expansion. However, the shares have rallied significantly since the late 2022 low. In my opinion, there is a possibility that the stock price may suffer a minor correction following their earnings report.

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