On Holding (ONON) Stock's Recent Dip: A Strategic Entry Point or a Warning Sign?

The recent decline in On Holding AG's (ONON) stock price—from a high of $60.68 in late May to $51.48 by mid-June—has sparked debates among investors. Is this dip a fleeting opportunity to buy a high-growth stock at a discount, or does it signal deeper structural issues? Let's dissect the technical and fundamental drivers to form an evidence-based view.

Technical Analysis: Bearish Signals, but Hidden Support

The stock's chart reveals a mix of bearish and bullish clues. Over the past six months, ONON has trended sideways within a $42–$60 range, with the 50-day moving average (MA) dipping below the 200-day MA—a classic "death cross" bearish signal. However, the stock's current price ($51.48) is approaching key support levels:
- The $50–$52 range, where the 200-day MA and historical lows converge, could act as a floor.
- The Relative Strength Index (RSI) is in oversold territory (below 30), suggesting a potential rebound.

A critical data point: the June 13 trading session, where volume surged by 138% but the stock closed 6.2% lower, highlights weak buying pressure. Yet, the lack of a panic sell-off (volume hasn't spiked further) hints at institutional confidence in the company's long-term story.

Fundamental Drivers: Strong Growth vs. Emerging Risks

On Holding's Q1 2025 results were robust:
- Revenue grew 43% YoY to CHF726.6 million, driven by premium product launches and market expansion.
- Adjusted EBITDA margins expanded to 16.5%, reflecting operational efficiency.

However, two macro risks loom large:
1. U.S. Tariff Uncertainty: 90% of On's production is in Vietnam, and potential tariffs could hike COGS by 25–30%. The company's premium pricing power may soften if competitors undercut them.
2. Currency Headwinds: The Swiss franc's strength is eroding the value of revenue generated in USD/EUR.

Valuation: Overpriced or Justified?

ONON's valuation is rich:
- P/E ratio of 76.7x (vs. 23.4x for Nike).
- EV/EBITDA of 53.55x, implying high expectations for sustained margin growth.

Bulls argue that On's innovation-driven brand (e.g., CloudFlow shoes) and market share gains in premium running footwear justify this premium. Bears counter that such multiples require flawless execution in a slowing economy.

The Verdict: Buy the Dip, but Stay Cautious

Bull Case:
- If On Holding can navigate tariffs and FX risks while maintaining sales growth above 20%, the stock could rebound to $60–$65 (pre-dip highs).
- The $50 support level is critical; a breach would signal deeper trouble.

Bear Case:
- A macroeconomic slowdown or a tariff shock could force On to slash prices, compressing margins. The stock's 15% downside risk to $43 (June's low) isn't trivial.

Investment Advice:
- Aggressive investors: Buy dips below $50, with a stop loss at $47.50, targeting $55–$60.
- Conservative investors: Wait for clarity on tariff risks and the August earnings report before committing.

Final Take

On Holding's dip is a test of conviction in its growth story. While fundamentals remain strong, the technicals and macro risks suggest patience is warranted. This isn't a "buy and forget" stock—monitor the $50 support, tariff developments, and August earnings closely. For now, the dip is a cautious opportunity, not a slam-dunk bargain.

Investors must weigh On's innovation edge against the storm clouds on the horizon. The path forward hinges on execution—and how well the company can navigate the choppy waters ahead.