Key facts
- Nike's share price has fallen 80% in market value over the past five years.
- Nike shares have risen 5% since joining the Dow Jones Industrial Average in 2013, while the S&P 500 has quadrupled.
- Nike's current share price of $36 makes it the smallest factor in the price-weighted Dow index.
- Nike holds the smallest weight among the Dow's 30 components, at 0.4%.
- Nike is the Dow Jones Industrial Average's worst performer this year.
- Goldman Sachs, the highest-weighted stock in the Dow, trades at about 27 times Nike's price.
Nike's position in the Dow Jones Industrial Average is under scrutiny as its share price continues to decline, making it the smallest component by price in the benchmark index. The sportswear giant was recently removed from the S&P 100 index as part of a quarterly rebalancing, a move that has fueled speculation about its future in the Dow.
Analysts attribute Nike's struggles to slowing sales, a lack of innovation, and increased competition from newer brands over the past five years. Since joining the Dow in 2013, Nike's shares have seen a modest 5% increase, significantly underperforming the S&P 500, which has more than quadrupled in the same period. With its share price recently at $36, Nike represents the smallest factor in the price-weighted Dow.
While the Dow Jones Industrial Average does not have explicit mechanical rules for component removal like other indices, a Reuters analysis of past changes found that stocks with the smallest weight were often removed. Nike currently holds the lowest weight among the Dow's 30 components at 0.4% and is the index's worst performer this year. Experts suggest the odds of Nike's removal are increasing, though the absence of a strict deletion rule makes the timing uncertain.
The Dow's Averages Committee, comprising representatives from S&P Dow Jones Indices and The Wall Street Journal, makes changes on an as-needed basis. The most recent change saw Verizon Communications replaced by Alphabet in June, driven by Verizon's low share price. Other recent departures include Dow Inc, Intel, and Walgreens. The committee monitors factors such as the ratio between the highest and lowest-priced stocks in the index; currently, Goldman Sachs, the top-weighted stock, trades at approximately 27 times Nike's price.
Nike's CEO, Elliott Hill, has acknowledged the company is navigating a challenging macroeconomic environment with pressure on consumer spending. Analysts note that Nike's appeal to consumers has diminished outside of a few key franchises.