Nike was once the undisputed king of athletic apparel, a brand so dominant that competitors seemed like afterthoughts. That narrative has crumbled in 2025. With shares down roughly 8% year-to-date while the S&P 500 has gained over 17%, Nike reports its fiscal second-quarter results Thursday—and investors are desperate for signs that the worst is behind them.

What Wall Street Expects

Consensus estimates call for $12.22 billion in revenue, $696 million in operating income, and earnings per share of $0.38. Options markets are pricing in approximately a 9% move around the earnings release, suggesting traders expect significant volatility regardless of direction.

Nike shares have shown some resilience recently, climbing from roughly $61.43 on November 21 to around $67.74 as of December 11—a gain of nearly 9%. Whether that's the start of a turnaround or a dead-cat bounce remains to be seen.

The Problems Piling Up

Nike's challenges are well-documented. The company has experienced revenue declines, margin compression, and intensifying competition from emerging brands like On Running and Hoka, which have captured the enthusiasm of younger consumers who once would have defaulted to Nike.

In late November, Moody's downgraded Nike's senior unsecured debt from A1 to A2, moving the company one notch lower within the high-grade spectrum. Credit rating agencies don't downgrade iconic American brands lightly—the move signals genuine concern about Nike's trajectory.

Leadership Shakeup

Nike appointed Venkatesh Alagirisamy as Executive Vice President and Chief Operating Officer, effective December 8, 2025. New operational leadership suggests the company knows it needs to change how it executes, not just what it sells.

Meanwhile, the board declared a $0.41 quarterly dividend, payable January 2, 2026, marking a 3% increase and extending its 24th consecutive year of dividend increases. The dividend hike signals confidence, but also raises questions about whether that capital might be better deployed on turnaround investments.

The Bull Case

Nike bulls argue the brand remains iconic, with global distribution capabilities and marketing muscle that no competitor can match. The recent stock weakness has created a more reasonable valuation, and any signs of stabilization in market share could spark a significant re-rating.

The Bear Case

Bears counter that Nike's problems are structural, not cyclical. The direct-to-consumer pivot alienated retail partners. The product pipeline has lacked innovation. And the premium positioning becomes harder to maintain when competitors are eating market share with arguably superior products.

What to Watch Thursday

  • Gross margin trends: Are promotional pressures easing?
  • China revenue: Is the crucial Chinese market recovering?
  • Inventory levels: Has the company worked through excess stock?
  • Forward guidance: Is management willing to commit to a timeline for recovery?

The Bottom Line

Nike's earnings Thursday represent a critical test for the turnaround thesis. Beat and raise, and the stock could rally sharply from oversold levels. Miss and cut guidance, and investors may conclude the problems are deeper than anyone realized. For a stock that's become a show-me story, this quarter's results carry outsized importance.