Nike Stock Falls 40% Despite Caitlin Clark Launch and Earnings Beat

Nike, Inc. (NYSE:NKE) rolled out Caitlin Clark’s signature collection worldwide on October 1, the same day it reported earnings. The stock has fallen over 40% this year, sparking debate about whether it now offers value. The earnings report provided mixed signals. While earnings per share (EPS) beat estimates at $0.48 versus $0.43, revenue dropped 4%. For the full fiscal year, Nike expects revenue to decline by a high single-digit percentage and adjusted EPS to range between $1.15 and $1.35.

The new Caitlin Clark line includes the Caitlin 1 shoe, a ‘CC’ logo, and apparel, with an 18-piece collection. The shoe retails for $140 for adults and $105-$115 for kids. Clark’s influence has boosted WNBA attendance and TV ratings, adding buzz to the launch. However, the earnings outlook remains challenging, particularly with weakness in Sportswear and China. The signature line is a small part of the broader picture.

Nike’s forward P/E ratio stands at about 21.0x, roughly 28% below its historical average of 32.97x. While this suggests a lower price per dollar of profit, the weaker outlook and declining EPS (forecast to drop 14.38% this fiscal year) raise questions about whether the stock is truly cheap. The current price may already factor in a recovery, with EPS expected to grow 31.39% in fiscal 2028 and 34.73% in fiscal 2029. The stock’s attractiveness depends on meeting these growth estimates.

Hedge fund ownership of Nike dropped from 71 funds at the end of Q1 2026 to 56 funds at the end of Q2 2026. Short interest remained high at 8.98% of float as of September 15, 2026. While Nike trades at a lower valuation than usual, the decline in hedge fund ownership, high short interest, and weaker guidance suggest investors are waiting for a clear recovery before buying.