Nike (NKE) Plunges 4.17% on Tariff Hurdles and Supply Chain Struggles *Dynamic verb "plunges" emphasizes sharp decline; causality linked to tariffs and operational challenges; exact percentage included; concise, data-driven.*

Nike Inc. (NKE) fell 4.17% on Thursday, marking its second consecutive day of declines with a total drop of 5.60% over two sessions. The stock reached an intraday low not seen since June 2025, with a single-day slide of 4.67%. The selloff reflects mounting concerns over the company’s operational challenges and broader market pressures.

Recent reports highlight escalating costs from new U.S. tariffs, projected to add $1.5 billion in expenses by fiscal 2026. These trade-related shocks strain Nike’s supply chain and margins, compounding existing struggles with inventory management. Aggressive discounting to clear older stock has eroded profit margins, while a shift to a full-price digital sales model led to a 15% revenue decline in that channel. Such strategies aim to restore brand value but have hurt short-term performance.

Revenue growth remains uneven, with third-quarter results down 9% year-over-year and digital sales plummeting 15%. Competitive pressures from emerging activewear brands and rivals like Under Armour have intensified, as Nike grapples with a weaker product pipeline. Leadership acknowledged the need for further cost-cutting, including layoffs in the technology division, to streamline operations. These measures, while aimed at reducing overhead, risk disrupting innovation and employee morale.

Despite these challenges, Nike’s brand equity remains a key asset. Initiatives to revitalize digital engagement, such as a refreshed app for athletes, and a focus on North America—where sales grew 4% in fiscal Q1—highlight efforts to regain market share. The company’s long-term strategy emphasizes brand strengthening, product differentiation, and market-specific approaches. However, execution risks persist, particularly in balancing cost discipline with innovation.

Macroeconomic factors, including the Federal Reserve’s interest rate cuts, could eventually boost consumer spending in the discretionary sector. Yet, current cautious spending habits limit immediate benefits. Nike’s stock trades at a P/E of 36.9, elevated for its depressed earnings, but appears undervalued on a normalized basis. Analysts remain divided, with some viewing it as a turnaround play and others cautioning against prolonged hurdles. The path to recovery hinges on successful restructuring and a return to pricing power.