Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Nike, Seagate Technology, and Slumped Today

By Dan Caplinger - Sep 4, 2018 at 4:32PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Find out how controversial issues affected more than one of these stocks.

Tuesday was a somewhat downbeat day for the stock market, but major benchmarks finished the session in a far better place than where they began. The Dow had dropped more than 150 points near the open, as investors feared that some of the long-downplayed threats to the bullish thesis for stocks might finally start to have a more pronounced impact. Yet by the afternoon, they once again reached a comfort level about overall risks in the market. Even with the partial recovery, some stocks weren't able to claw back all their losses. Nike ( NKE 1.98% ), Seagate Technology ( STX ), and ( JD -0.84% ) were among the worst performers on the day. Here's why they did so poorly.

Nike takes a knee

Shares of Nike fell 3% in the wake of controversy surrounding its latest athlete endorsement for its "Just Do It" advertising campaign. The athletic footwear and apparel giant released ads featuring former San Francisco 49ers quarterback Colin Kaepernick, who became the focal point of protests among National Football League players by getting down on one knee during the playing of the national anthem. Many Nike customers were outraged by the move, showing pictures of them destroying their Nike products on social media, but others praised the campaign. For the stock, today's decline took only a tiny bite out of the 50% gain the shares have enjoyed over the past year.

Storefront of Nike Women retail store, with Come Run With Us campaign in the window.

Image source: Nike.

Seagate has some investors scared

Seagate Technology stock dropped 8% after the hard-disk drive manufacturer received a downgrade from an analyst company. Analysts at Evercore dropped their rating on Seagate from in-line to underperform and cut their price target on the stock by $10 per share to $45. After having enjoyed a long period of strength, analysts see a new downward cycle for flash memory prices that could force Seagate to cut its own product prices, potentially leading to a longer-term downturn for the data storage specialist. Evercore isn't the first to see potential problems for Seagate, but with shares down more than 15% from where they were earlier this year, the threat of a reversal of fortune for the company appears to be growing.

JD deals with CEO troubles

Finally, shares of fell another 6%. The Chinese company has been at the center of controversy recently, as CEO Richard Liu has had to deal with allegations of sexual misconduct over the past week. Last Friday, Liu was briefly arrested in Minnesota before being released and returning to Chinese soil. The Wall Street Journal reported that Liu had been arrested on suspicion of rape but no charges had been filed. Attorneys for Liu say that they don't expect charges to be filed. The Wall Street Journal quoted a lawyer for Liu as saying: "There is no believable or credible evidence that he has done anything wrong and he denies any wrongdoing." 

Still, given that the chief executive holds voting rights that give him roughly 80% control of JD, negative publicity surrounding the allegations could prove to be problematic for JD's reputation amid an extremely crowded and competitive environment in the Chinese internet industry.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

NIKE, Inc. Stock Quote
NIKE, Inc.
$170.00 (1.98%) $3.30
Seagate Technology plc Stock Quote
Seagate Technology plc
STX, Inc. Stock Quote, Inc.
$84.46 (-0.84%) $0.72

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/02/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.