Nike Stock Has Lost Value 4 Years Straight. Will 2026 Be Different?

After hitting an all-time high in November 2021, Nike ( NKE +4.64%) stock has formed a bad pattern of dropping each year. The stock fell 29.8% in 2022, 7.2% in 2023, 30.3% in 2024, and is down 22.4% year to date at the time of this writing. Add it all up, and Nike has lost roughly 65% of its value since the start of 2022 -- leaving investors wondering if 2026 will be different, or if more pain is ahead. Here's a valuable lesson that Nike has taught investors, which you can apply to any stock in 2026, and why Nike could be a great contrarian stock to buy for long-term investors. Image source: Nike. Nike and the importance of investor psychology Over the long term, earnings drive stock prices. But in the short-to-medium-term, sentiment clashes with fundamentals. One useful exercise is to imagine a buyer profile for a specific company. For example, the typical Coca-Cola investor is likely someone who isn't necessarily looking to keep pace with a roaring market, but rather, wants to protect against downside risk and collect dividends from a company that has raised its payout every year for more than six decades . In the meantime, Nvidia investors are probably looking for outsized gains, even if they must pay an expensive price for that potential. Anytime the buyer profile changes, that's usually a recipe for some wonky stock price action, like how Broadcom is evolving from a steady, highly diversified networking and semiconductor company to a high-octane growth stock with a booming artificial intelligence (AI) business . The hypothetical Nike investor has undergone significant changes in recent years. Nike has been a growth stock for most of its history -- commanding a premium valuation in exchange for strong margins, an impeccable brand, and a global presence spanning footwear (and increasingly apparel). During the pandemic, Nike's direct-to-consumer (DTC) business thrived as buyers took their shopping online. Nike had it all, but it wouldn't last, as DTC wasn't able to offset the wholesale business. DTC can be higher margin than wholesale because it connects buyers directly with sellers, but it also puts all the pressure on sellers to, well, sell, rather than getting help from a third party. Nike's DTC business -- online and through its stores -- is struggling because Nike's product mix isn't resonating enough with cost-conscious consumers -- which has led to price cuts, margin compression, and innovation challenges. NYSE: NKE Key Data Points Nike is in full turnaround mode Nike is no longer a growth stock because investors have lost confidence in its ability to take market share and deliver on its promises. So investors who are considering the stock now, or are holding it throughout this period, are likely doing so for the turnaround story . A turnaround is essentially a dramatic strategic shift a company undertakes to get back on track. There have been plenty of successful turnarounds in history, some taking several years and others happening rather quickly. Microsoft (...

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