"Nike's $210 Billion Collapse" - Mbappè Jumps to On Cloud

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Patrick Bet-David (0:26)

A guy like Mbappé, who's the biggest face of soccer today, I don't know if there's a name bigger than him. The guys won a World Cup at the age of 19

He almost won a second one. He almost went to the third one. All-time score in the World Cup. Nike loses Mbappé to On Cloud. Not to Puma, not to Adidas, but to On Cloud. How does Nike lose the biggest soccer star today to On Cloud? And you see how Nike's shares in China, quarter after quarter after quarter, has dropped. Greater China revenue dropped 22% reported, 26% currency neutral in the last quarter alone. And by the way, nine quarters in a row, which is a little over two years, Nike has lost their revenue in China, nine quarters in a row. Nike lost ground to faster moving competitors like On Cloud, Adidas, Hoka and others. At the same time, we talked about this last time, Tom, the fact that they're wholesalers, they started becoming competitive with their wholesalers. Before, they would sell it to wholesalers. Now, Nike got cocky and said, we don't need wholesalers anymore. We can sell it on our own. Don't worry about it. You guys are lucky. And they're like, wait a minute, what are you talking about? You're cutting us. We've been the wholesaler for you. They cut them through. And then their digital is shrinking. Nike Direct fell 8 percent. Nike Brand Digital fell 13 percent. For Fiscal 2026, the Jordan Brand and Sportswear Business has also weakened. I'm sure Michael is not too happy about that. Revenue growth has basically disappeared. Fiscal 2026 revenue was only $46.4 billion. Flat reported, undone, 2 percent currency neutral. Turnaround has taken much longer than Wall Street hoped. Elliott Hill returned as CEO in 2024 and has made some changes, but nothing that's crazy right now. So Tom, when you're looking at what's going on with them, by the way, let me give you some market cap numbers.

At the end of 2021, Vinny, Nike's market cap was $264 billion.

$264 billion. Do you know what their market cap is today?

$50 billion. I don't know if you're what I just said. That's like you have $262,000 in the bank. That's down to $50,000 in your mutual fund. That's like you went from having $2.6 million in your 401k. It's down to $50,000. That's down to half a million dollars. From $260 billion to $50 billion. Tom, what happened with Nike?

Tom (2:49)

So here's what happened with Nike. Nike did three things to itself. First of all, it decided that what it was seeing in all the direct-to-consumer stuff, it was going to go after. It goes after direct-to-consumer.

And it did so on logic. And the logic was this. Malls are having more trouble with foot traffic. We've all read about malls.

And so Nike was sitting. Remember, they're not dumb. They just made what turns out to be a bad decision. They're in the boardroom and saying, how hard should we bet on foot locker with all this mall stuff going away? Should we protect? Should we sell direct-to-consumer? Well, they had some strategic decisions to make, therefore, about distribution, but they fumbled it. They pissed people off. They didn't do it moderate. They didn't look at... I don't think they looked at data hard enough. I think they're more emotional about it, basically what I've seen. And by the way, Elliott Hill wasn't there. Elliott Hill was the CEO that got brought back after being gone for two years, right? He came out of retirement two years ago in 24 And so they're like, hey, who else came out of retirement?

Major US brand, major market cap problem. Disney. Howard Schultz came out of retirement at Starbucks. But then they went off and got Brian Nicol and guess what? That's shifting, it's turning. The guy comes out of retirement. Howard says, we got to fix this, this, this, this, Starbucks. And we need a guy to drive it. They go get Brian Nicol and look at what they are. They're turning it around. So first, they have a distribution. The second thing they had was product. Product was getting kind of long in the tooth. And they completely missed.