Nike shares fell more than 3% after hours Thursday following earnings.
The footwear maker reported a surprise earnings loss of 51 cents a share, falling short of estimates by 54 cents. Revenue declined 38% to $6.31 billion, also short expectations.
Ascent Wealth Partners’ managing director Todd Gordon said he was bullish on the stock ahead of the earnings report Thursday.
“We think Nike is a good indication of future sales in China and how the Chinese consumer is doing in general,” Gordon told CNBC’s “Trading Nation” earlier Thursday. In its February-ended quarter, “Nike stated they reopened 80% of the stores following Covid, and with all the shutdowns in domestic and retail sales locations, they’ve done a good job transferring to the e-commerce sales.”
Gordon expects Nike to strengthen its e-commerce platform. Nike Direct, its online sales segment, generated nearly 32% of total revenue in 2019 and is expected to grow to 35% in 2020. The company reported a 75% increase in digital sales in its May-ended quarter.
That shift to e-commerce has paid off for Nike shares.
“If you look at the long-term beautiful uptrend here, you can see that we had obviously a little bit of volatility along with our broader market during COVID. We’ve since recaptured all of the losses, resting just below the $105 area, which any kind of push would certainly send momentum breakout buyers into the market,” said Gordon.
To take advantage of a move higher, Gordon is buying the 105 call and selling the 110 call with Aug. 21 expiration. This is a bet Nike can rally as high as $110 by expiration. It closed at $101.40 on Thursday.