Nike stock plunges 8.5%; here’s how sportswear giant lost $230 billion m-cap, its mojo

As per the latest business developments, Nike shares crashed 8.5% in extended trading on Thursday, wiping billions of dollars off the sportswear giant's market value after it forecast a high-single-digit topline slide for fiscal 2027 and announced job cuts as part of a $2.5 billion cost-saving plan. The stock is already down more than 40% this year, extending a brutal run for the firm under CEO Elliott Hill.

The sell-off followed Nike's weaker-than-anticipated quarterly earnings and a bleak outlook, with falling sales in China, softness in its Sportswear and Jordan businesses, and a 14th straight quarter of declining Converse topline adding to pressure on the turnaround. What happened?

Nike noted topline of $11.2 billion for the fiscal first quarter ended August 31, down 4% from a year earlier and below market observer expectations. Earnings declined 2% to $712 million.

The bigger concern was the outlook. Nike now anticipates topline to slide by a high-single-digit percentage in fiscal 2027, compared with the 2.4% slide market watchers had projected. Bloomberg noted that this would put Nike's annual sales at their lowest level since the fiscal year ended May 2020.

The latest results have increased pressure on Hill, who took over as CEO in 2024 and is now entering his third year leading the turnaround. Why is Nike cutting jobs?

Nike stated it will reorganise its business and consolidate geographical divisions as part of a restructuring plan anticipated to generate $2.5 billion in savings over five years. The firm anticipates around $1 billion in pretax charges from the plan.

Greater China, which has recorded nine consecutive quarters of declining sales, will be merged with the broader Asia Pacific region. Latin America, previously grouped with Asia Pacific, will be combined with North America.

BREAKING: Nike stock, $NKE, crashes another -6% to its lowest level since September 2013 after posting weaker than anticipated earnings.

The stock is now down -82% from its record high, erasing -$230 billion in market cap. pic.twitter.com/85Vrxv7Eeu

— The Kobeissi Letter (@KobeissiLetter) October 1, 2026

In a memo to employees, Hill stated, "This work will result in fewer roles across Nike." Decisions on affected positions will begin in 2027, although the firm has not yet specified how many jobs will be eliminated or where. What is going wrong?

China stays one of Nike's biggest problem areas, with local competitive pressure and growing consumer preference for domestic brands weighing on sales. The firm is pulling back from third-party websites and reducing promotions in the market.

Nike's Sportswear business, which includes fashion shoes and apparel and accounts for around half of topline, noted a low-double-digit sales slide last quarter. The Jordan brand has additionally lagged, prompting Nike to reduce the volume and frequency of some retro product launches.

Converse has now recorded 14 consecutive quarters of falling sales.

What does the market reaction mean?

The 8.5% after-hours decline adds to a more than 40% slide in Nike shares this year. The Kobeissi Letter has previously highlighted the scale of Nike's market-value slide from its peak, with around $230 billion erased from its all-time high.

Vital Knowledge's Adam Crisafulli described Nike's latest guidance as "pretty ugly" and stated management's repeated lowering of its outlook could "grate on market participants".

Bloomberg Intelligence market observer Poonam Goyal stated Nike's turnaround may have "stalled", pointing to softness outside North America and the softer fiscal 2027 outlook.

Nike is due to provide more details on its efficiency measures and outlook at an investor day next month.