Nike's Oversold Shares Present a Strategic Opportunity Amid Tariff Uncertainty

The recent court-blocked tariffs on Asian imports have thrown Nike's supply chain strategy—and its stock price—into a tailspin. Yet beneath the volatility lies a compelling case for a near-term buying opportunity. With shares hovering near multi-year lows and the company executing a disciplined pricing strategy, investors are being offered a rare entry point into a brand with unmatched resilience in athletic wear.

The Tariff Tango: Uncertainty, but Not Catastrophe

The federal court's May 2025 ruling temporarily halting President Trump's tariffs on Chinese and Mexican goods provided a reprieve for Nike, which sources 18% of footwear from China and 50% from Vietnam. While the decision initially sparked a 3% after-hours rally in Nike's stock, the reprieve was short-lived. The administration's appeal reinstated uncertainty, leaving tariffs in limbo.

Nike's response was swift: a June 1 price hike averaging $5–$10 across adult apparel and shoes (children's items excluded). This move underscores two critical points:
1. Pricing Power: Nike retains the ability to pass costs to consumers without risking demand erosion—a testament to its brand strength.
2. Strategic Prudence: By timing hikes to coincide with tariff threats, Nike is signaling confidence in its ability to navigate trade headwinds.

The company's supply chain diversification also mitigates risks. While 34% of footwear comes from China, Vietnam (46%) and Indonesia (10%) are critical hubs, with further moves to Southeast Asia in the works. This geographic flexibility reduces reliance on any single tariff battleground.

Technicals Scream Oversold, but Bulls Need Patience

Nike's technical indicators paint a mixed but intriguing picture.

• RSI (14): At 44.05, it's below neutral (50) but not yet oversold (below 30). However, the RSI has spent 10 days below 40—a warning of prolonged bearish momentum.
• Stochastic Oscillator: At 15.50, it's deep in oversold territory (<20), suggesting a short-term rebound is likely.
• Williams %R and CCI: Both confirm extreme oversold conditions (-97.45 and -132.25, respectively), often precursors to a bounce.

The death cross (50-day SMA below the 200-day SMA) remains intact, reflecting a bearish long-term trend. Yet the proximity to the 50-day SMA ($59.21 vs. current $59.51) offers near-term support. A break above $62.18 (June 16 high) could unlock momentum toward the 23.6% Fibonacci retracement at $67.50.

Why Bulls Should Bet on a Turnaround

1. Margin Stability: Despite tariffs, Nike's pricing strategy aims to offset up to 5% margin erosion. The court's temporary block buys time to test this.
2. Demand Resilience: Athletic wear is a discretionary category with strong inelastic demand. Post-pandemic recovery trends and rising fitness culture support Nike's position as a leader.
3. Cost Control: Supply chain diversification and automation (e.g., Vietnam's new factories) are reducing reliance on high-tariff regions.

The Investment Thesis: Buy the Dip, but Set Stops

Nike's stock is down 18% YTD, pricing in worst-case tariff scenarios. The confluence of oversold technicals and fundamental levers (pricing, diversification) suggests a strategic entry point near current levels ($59.51).

Recommendation:
- Buy: On dips below $58.50, targeting the $62.18 resistance.
- Stop-Loss: Below $56.00 (the May low).
- Target: $67.50 (23.6% Fibonacci) if momentum builds.

Risks to Consider

• Tariff Volatility: If the court's stay is lifted and tariffs resume, Nike may face renewed margin pressure.
• Consumer Backlash: Aggressive price hikes could dent sales if competitors hold prices steady.

Final Take

Nike's valuation is now pricing in a worst-case scenario—one where tariffs remain permanently elevated and demand collapses. Yet the company's brand strength, geographic flexibility, and disciplined pricing suggest this is a buying opportunity. Technicals hint at a short-term rebound, while fundamentals argue for a long-term hold. For investors with a 6–12-month horizon, now is the time to position for a turnaround.

Trade with conviction, but stay nimble.