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Nike shares: earnings beat, forward guidance disappoints

Nike shares are struggling to find momentum in all-sessions trading after finishing the session lower on Monday after fourth quarter earnings were released.

(Video Transcript)

Nike Q4 earnings

We've seen earnings out from NIKE Inc (All Sessions) last night, and despite posting better than expected numbers, the share was still down in extended hours after the release as the group has forecasted first quarter (Q1) revenue below estimates.

Earnings came in at $0.19 per share on revenues of $12.23 billion. Analysts had expected earnings per share (EPS) of $0.81 and revenue of $12.07 billion.

Nike: technical analysis

Let's bring up the chart now to see how Nike is trading.

Now, remember, this is an all-session share on the IG platform, which means you can trade it from 9 a.m. UK time prior to the US open later on this afternoon.

And as you can see, the reaction yesterday selling off after the announcement there, coming down to end the session down about 4.8% on the day. So far today, we have opened pretty much unchanged, not much move, seeing a little bit of momentum to the upside, trying to recover some of that move, especially on those better-than-expected earnings.

But if we're looking at the messaging around this, we saw chief financial officer, Matthew Friend, say that Nike is taking a cautious approach to greater China given the uncertainty around additional Covid disruptions and expect first quarter revenue to be flat to slightly up, below estimates of a 5.1% increase.

So that's the outline there from the messaging from those earnings. As we know, markets have been focusing a lot lately on forward guidance, what's going to come, especially now that we've seen inflation and costs gearing up. A lot of focus now on what are they going to deliver in the upcoming few months.

We've seen the message, still expecting to see a little bit of a gain there for Nike. But below expectations that we've seen so far, the share remains within this descending channel, you can see.

But if we zoom out a little bit, just to get the greater picture here, you can see we're still very much within that higher trend compared to where we started prior to the Covid rally. This is the beginning of 2020 here, the beginning of the summer. You can see we're now nearing that area, an area that's potentially more sustainable. Now, undone most of that Covid rally coming to rest around that area here. The 100 area at the moment, it's likely that we see a bit more price instability along this area and also finding a bit more support from where we've seen those previous lows, helping the price, trying to push higher and break this descending channel.

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