Hard to believe John McCain died only one week ago, huh? Well, the news cycle waits for no one unfortunately. Earlier this week, Nike announced a new campaign that featured former NFL player Colin Kaepernick with the caption: "Believe in something. Even if it means sacrificing everything."
Politically this issue is divided, but what I want to examine is whether or not this move will impact Nike positively or negatively. When the announcement was made, within 24 hours stock prices of Nike fell from $82.18/share to $79.01/share; it hasn't gone any lower and as of this writing, the price is at nearly $80.00/share.
Tweets and headlines have suggested that Nike is getting crushed, but a stock price dropping 4% isn't necessarily a cause for concern, especially when the stock is up 26% on the year and Nike experience similar drops in this calendar year already and recovered well.
Economically, Nike isn't sinking nor was this a careless move. It was calculated and as the old saying goes, any press is good press. As a matter of fact, per Bloomberg:
In less than 24 hours since Kaepernick first revealed the spot on Twitter, Nike received more than $43 million worth of media exposure, the vast majority of it neutral to positive, according to Apex Marketing Group.
I don't remotely see how this is a financial loss for Nike. Politically, people in a certain segment may not like it, but financially I see nothing but upside for Nike. Plus, this generates more conversation and people are talking about nothing but Nike and Kaep right now.
There is, of course, an argument to be made for the justification of this ad campaign by Nike for using a controversial figure, but that's why they did it. And so far, it's worked. I even saw a meme that compared Nike to Dick's Sporting Goods; if that's the case, then Nike will go up even farther as Dick's is up 36% YTD. This, my friends, is why you don't mix financial projections with political objections unless you can show a direct, long-term correlation.