For Nike Inc., big risk has become big reward.
Shares for the athletic behemoth soared to an all-time high Thursday — ending the trading day at $83.49 — on the heels of a prickly week that saw the firm shoulder backlash over an ad featuring polarizing ex-footballer Colin Kaepernick.
Calls for a boycott — including a full-blown ban in Louisiana — and a small wave of sneaker burning across social media briefly sent the firm’s stock down a modest 2 to 3 percent last week but the controversy is ultimately proving fruitful for the brand, which has a history rooted in supporting social causes. (The Nike ban in Louisiana has since been rescinded.)
“I’m not surprised that Nike did this because it’s been in their DNA to be provocative and vocal about social issues — whether it’s environmental or freedom of speech, which this clearly is,” Camilo Lyon, a Wall Street analyst with Canaccord Genuity Inc. told FN last week of the Kaepernick ad. “I’ll point to the shoes [basketball superstar and Nike athlete] LeBron James was wearing during the [2018 NBA Championship Playoffs] that had ‘equality’ on them. Nike is not afraid to take a stand and this is what they’ve done.”
James — referring to himself as a #NikeLifer — took to Twitter last night to support the brand’s latest financial milestone, “Well I mean I guess we’re on [fire] …”
Since the ad debuted — first with an image shared on social media by Kaepernick on Sept. 2, then with a TV spot on Sept. 6 — sales and online mentions of Nike have reportedly skyrocketed.
A probable explanation is Nike’s move to cast Kaepernick in its latest campaign — for the 30th anniversary of “Just Do It” — was meant to bring it closer to its core demographic even if it meant alienating a group that was hardly Swoosh supporters to begin with.
“Gen Z and Millennials will respect Nike doing this and they are the core demographic for Nike,” Matt Powell, senior industry adviser for sports with The NPD Group Inc., told FN this month. “Two-thirds of the people who wear Nike footwear in the U.S. are younger than 35. This is the generation we’re talking about. Nike is really speaking to their consumer here.”
Perhaps it wasn’t a big risk at all.