Is Nike (NKE) About to Lose Its Dow Jones Membership?

Key Takeaways

• On September 21, Nike will exit the S&P 100 following an 80% market capitalization collapse over five years, now valued at approximately $53 billion.
• Trading near $36, Nike represents the Dow Jones Industrial Average’s least expensive and most negligible component, accounting for merely 0.4% of the index.
• Goldman Sachs leads the Dow with shares around $968, approximately 27 times Nike’s current valuation.
• Wall Street sentiment remains pessimistic before Nike’s October 1 financial results, with UBS projecting consensus misses and disappointing Q2 projections.
• Revenue is expected to decline year-over-year for both the present quarter and the fiscal period concluding in November.

Nike (NKE) currently hovers around $36 per share, and this low valuation is creating significant concerns about its continued membership in the Dow Jones Industrial Average.

NIKE, Inc., NKE

S&P Dow Jones Indices announced Nike’s forthcoming removal from the S&P 100 index effective September 21 before market opening, pointing to the company’s market capitalization decline of approximately 80% across the previous five years to roughly $53 billion. This development has sparked widespread speculation about whether a Dow exit could follow.

Because the Dow operates on a price-weighted methodology, stocks trading at lower prices exert diminished influence. Nike currently commands only 0.4% of the index’s total weighting, making it the smallest among all 30 constituents. Coca-Cola holds the second-smallest position, trading near $88 with a 1% weighting.

Goldman Sachs dominates the index with shares trading around $968—approximately 27 times Nike’s current price point, a disparity the Dow’s Averages Committee reportedly tracks closely.

Since joining the Dow in 2013, Nike’s shares have climbed a mere 5%, while the S&P 500 has surged more than fourfold during the same timeframe.

The Dow lacks predetermined removal criteria. The Averages Committee—comprising three representatives from S&P Dow Jones Indices and two from the Wall Street Journal—implements changes when deemed necessary. All deliberations remain confidential.

However, a Reuters examination of the past decade’s 10 Dow modifications since 2013 revealed that at minimum half involved eliminating the component with the smallest weighting at that moment.

“When you examine the historical pattern, it’s definitely positioned as a removal candidate,” stated Josh Bischoff, partner and head trader at TimesSquare Capital Management.

Pessimistic Earnings Expectations

Analyst sentiment toward Nike continues deteriorating ahead of its October 1 earnings announcement. Among analysts tracking the stock, 26 assign it a Hold rating and five designate it a Sell, versus only 12 Buy recommendations, per FactSet data.

UBS analyst Jay Sole noted this week that Nike’s worldwide sales momentum has “worsened during the past three months.” He anticipates earnings will fall short of consensus projections and the Q2 guidance will significantly undershoot current market expectations.

“While sentiment is negative, our investor discussions indicate the market is underestimating how substantial the downward EPS adjustments will be,” Sole stated.

Wall Street projects year-over-year revenue contractions for both the ongoing quarter and the fiscal period ending in November.

Industry-Wide Challenges

Nike isn’t experiencing these difficulties in isolation. Adidas has declined over 15% year-to-date, while HOKA parent company Deckers Outdoor has tumbled 25%, and On Holding has plummeted nearly 45%.

Disappointing financial results from Dick’s Sporting Goods, which also operates Foot Locker, highlighted the challenging environment pervading the athletic footwear retail sector.

A silver lining: Nike’s dividend yield stands at 4.6%, representing the Dow’s highest, providing some attraction for income-oriented shareholders.

CEO Elliott Hill, who returned to the organization in 2024 to spearhead a strategic revival, recognized during a June earnings discussion that Nike is managing a “more complicated macroeconomic landscape” featuring heightened constraints on consumer expenditure.

Nike refused to provide commentary regarding potential Dow removal speculation.

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