Why Nike (NYSE:NKE) Made the Right Move

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Undoubtedly, you have heard the news that controversial sports figure and former NFL quarterback, Colin Kaepernick, is the new face of Nike's (NYSE:NKE) long-running "just do it" campaign. Some were shocked by the announcement, deriding it, saying that Nike Inc (NYSE:NKE) was going to go under because of this and in some cases burning or destroying their Nike Inc (NYSE:NKE) products in one of the most impotent boycotts behind making Starbucks Corporation (NASDAQ:SBUX) write Merry Christmas on coffee cups.  

Nike's new ad featuring Kaepernick and one Nike owner's reaction

The Aftermath

After the announcement, Nike Inc (NYSE:NKE) stock fell by 2 dollars a share falling from 82 USD. It didn't take long for the stock to find support and since the announcement it shares has been slowly filling the gap, currently selling for a little over 81 USD per share. Clearly NKE stock isn't having any problems finding buyers and market makers are just shaking out retail investors. The narrative was Nike Inc (NYSE:NKE) would plunge and continue to plunge, that didn't happen, and it won't. The "plunge" already happened much to detractors dismay. 

That they have never had to declare bankruptcy due to poor business decisions?


"Smart money" has already snapped up the shares of panic sellers and shorts who are being handily squeezed. The reality is this is a long-term decision for Nike Inc (NYSE:NKE) and their stock will reflect that. The people burning their shoes and cutting up their socks will forget about this within months and are likely buying products under Nike Inc (NYSE:NKE) without even knowing it. After all, this is the same group who boycotted Target Corporation (NYSE:TGT) for a week and then went right back to shopping at the superstore. Why is that? Because their protests are hollow, there isn't conviction to them and ironically they aren't ready to sacrifice. Their protest is built on a feigned outrage while conversely, Colin Kaepernick is highlighting a genuine systematic issue, his conviction costing him his job. He has a much better gig now.

Nike Inc (NYSE:NKE) understands their demographics, they have been around long enough as a company to see historical upheaval, and at times have had their own morality challenged. They are taking an active role at this point, by taking Kaepernick as a spokesperson, in challenging the system. They understand the best long-term ad campaign is being on the right side of history. As a long-term investment Nike Inc (NYSE:NKE) is safe and may even break out once the current gap fills and football season is in full swing, after all, they are the official apparel of the NFL.

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