After Utah Jazz center Rudy Gobert tested positive for the COVID-19 coronavirus, the NBA suspended its entire basketball season indefinitely on Wednesday night. That was not good news for Nike (NYSE:NKE), which advertises its footwear heavily during NBA games, and was already feeling the impact of the pandemic on its Chinese manufacturing facilities.
It might be excessive to pin all the blame for Nike's stock slump in after-hours trading on this piece of news: Nike shares fell 7.14% overnight -- marginally less than the 7.4% plunge that the broader S&P 500 took in the wake of President Trump's address on the coronavirus pandemic. But the shoe company's shares kept dropping Thursday, and were down by about 11.5% from Wednesday's close as of 1:45 p.m. EDT.
Gobert's test results arrived a few minutes before the scheduled start of a game pitting the Utah Jazz against the Oklahoma City Thunder. The game was immediately postponed. A second Jazz player, shooting guard Donovan Mitchell, also tested positive Thursday morning, as did an unidentified third person associated with the team. The five other teams which had most-recently played against the Jazz are expected to self-quarantine in response to the infections.
Responding to the NBA news, analysts at Susquehanna dropped their price target for Nike from $115 to $100 a share. The analysts tempered their downgrade by noting Nike's market strength will likely allow it to rebound faster than most of its competitors once the coronavirus threat abates.
This all followed one of the worst Januaries for shoe importers in 10 years, according to Matt Priest, CEO of the industry association Footwear Distributors & Retailers of America: Imports fell by 15.7% that month. The NBA's woes are just the latest in a series of COVID-19 related headwinds to hit Nike, including a potential 50% plunge in its first-quarter shoe sales from brick-and-mortar locations in China.