On CNBC’s Closing Bell Overtime, Needham’s Tom Nikic outlined his bearish thesis for Nike, citing a combination of slowing top-line growth, persistent margin pressures and challenges in its Greater China business. Nikic highlighted that revenue growth decelerated to mid-single digits in the fiscal year ending May 2025, below the company’s long-term target of high-single to low-double-digit growth, and warned that ongoing inventory buildup in North America could further compress margins through 2026.

Nike’s net income tumbled from $1.5 billion in Q4 2024 to just $211 million in Q4 2025, a decline of nearly 96%, as higher import costs from Chinese and Vietnamese production centers forced price increases and squeezed profitability. The company reported that tariff-related expenses added over $2 billion in costs last year, contributing to a 17% share price drop over the same period and driving consumer discretionary sector returns to just 6% in 2025, making it the third-worst performing segment of the S&P 500.

In response to margin pressures, Nike rebalanced its supply chain by reducing volumes sourced from China and scaling back Vietnam production, while implementing cost-cutting measures across its corporate structure. These efforts contributed to net income rebounding to $792 million in Q2 2026, a sequential improvement of more than 275%. Although net cash from operating activities remains negative—at –$50 million in the latest quarter compared with –$1.375 billion in Q1 2025—the trend has steadily improved over five of the past six quarters.

Wall Street’s consensus 12-month price target implies approximately 16% upside from current levels, driven by expectations of margin normalization and stronger e-commerce growth in emerging markets. Short interest on the stock stands at 2.52%, down 11.27% from the prior reporting period, suggesting diminishing bearish sentiment. In addition, insiders have purchased over $4 million worth of shares since the start of the fiscal year, signaling confidence from both management and independent directors in a sustained operational turnaround.