Freedom: Nike shares will remain under pressure until sales in China stabilize

Shares of Nike (NKE) fell more than 8% in after-hours trading following the release of the quarterly report: sales in China declined by 26%, and the company forecasts a 7–9% drop in annual revenue. Freedom analyst Vladimir Chernov believes that the earnings-per-share beat does not offset the deterioration in the business outlook. Until there are signs that demand in China is stabilizing, the stock, in his view, will remain under pressure.

Nike is a U.S. manufacturer of athletic footwear, apparel, and equipment. The company sells products through its own stores and digital platforms, as well as through wholesale partners.

Profit beat expectations, revenue came in below the forecast

According to Nike’s report for the first quarter of fiscal 2027, ended August 31, 2026, revenue fell 4% year over year to $11.21 billion. Diluted earnings per share were $0.48.

Chernov considers the full-year guidance the main disappointment. Nike expects revenue in fiscal 2027 to decline by about 7–9%, whereas the market consensus had projected a 2.4% drop. Such a gap shows that the business recovery is progressing more slowly than investors had anticipated.

Sales in China have been falling for a ninth consecutive quarter

In the reporting quarter, Nike’s sales in Greater China fell by 26%. The region has posted negative dynamics for a ninth consecutive quarter. Management warned that revenue conditions in China could worsen over the remainder of the fiscal year.

The company intends to limit online sales through some large retail partners in China. It aims to strengthen control over pricing and product distribution, reducing the pressure from widespread discounting.

Chernov believes these measures could further reduce revenue in the coming quarters. While Nike restructures its sales channels, the company also needs to revive consumer interest in its products. Changing the terms of cooperation with partners alone does not guarantee a return in demand.

Investors remain skeptical about Nike’s recovery

At the time the original news was published, Nike shares were down about 45% year to date. Shortly before the report, short interest exceeded 7% of the free float versus about 3% a year earlier. Short positions allow investors to profit if the stock price declines.

In Chernov’s assessment, this dynamic reflects deep market skepticism. To improve investor sentiment toward Nike, there will need to be signs of stabilized sales in China and more convincing results from the business recovery.

Freedom previously warned of a slow recovery in sales

In August, Freedom cut its target price for Nike shares from $60 to $54, maintaining a “Hold” recommendation. Analysts noted that weak demand in China and intensifying competition would restrain the company’s return to growth. These benchmarks relate to the previous analysis and are not a new assessment following the October earnings report.

Earlier, Freedom Broker also reported that Nike shares had fallen to an 11-year low. Even then, investors linked the company’s prospects to a recovery in the China business and improved profitability.

This is not an individual investment recommendation.