Nike Stock Slumps After JPMorgan Warns of $1 Billion Revenue Hit in China

Nike's stock took a hit on Tuesday, falling 3.6% after JPMorgan analyst Matthew Boss downgraded the company's shares to 'underweight' from 'neutral'. Boss also slashed his price target for Nike (NKE) to $40 from $47, citing concerns that the company's 'Win Now' strategy will drag on earnings through at least fiscal 2028.

The biggest challenge facing Nike is its China business. The company has pulled back online sales from third-party platforms like Tmall and JD.com, while cutting ties with partners Topsports and Pou Sheng. JPMorgan estimates that this move alone could wipe out around $1 billion in revenue, or about 20% of Nike's fiscal 2026 China sales.

Nike is sacrificing near-term revenue to gain tighter control over pricing, inventory, and the customer experience. While this may pay off eventually, Wall Street sees more pain than payoff for now. The stock trades at $41.77 versus a GF Value estimate of $73.13, putting it nearly 43% below its estimated fair value.

A cheap stock can always get cheaper if the business keeps disappointing, and that's exactly what JPMorgan is warning about with Nike. For long-term investors, it's no longer a question of valuation, it's a question of whether management can deliver the turnaround before the market loses faith completely.