Latest / Black Box Theory Podcast / Nike Just Got Dropped From the S&P 100
Transcript
- Malcolm: Which is not to be confused with the SP 500. ⁓ but yeah, the SP Dow Jones, they ⁓ they announced September ⁓ 4th and 5th at effect of September 21st, which is coming up soon, that Nike is dropping out of the S P 100, which is the top 100 large cap subset of the SP 500, along with Honeywell Aerospace, Simon Property Group, ⁓ Colgate, ⁓ Palm Olive. ⁓ and these are being replaced with Dale. ⁓ Apollo Auto networks, Arista networks, and then Sand Disc, which are all tech and infrastructure stocks, which makes sense if you've seen like the momentum of the last few years, like like tech, AI infrastructure, compute, networking are all kind of like taking over that. The SP is very soon going to be very heavily concentrated in like like tech. ⁓ but to be clear, like I said, Nike is staying in the in the overall SP 500, right? It's not delisted. It still trades normally on NYSC. Thomas: Mm-hmm. Malcolm: ⁓ so this is an index membership change, not a bankruptcy or delisting event, not to be confused, right? So for context, the stock is down 77 to 79 percent from its November 2021 peak. November 2021, it was $177. It is now $38 a share. The market cap is down from $280 billion to $57 billion. So roughly $220 billion in market value has been erased from from Nike over four years. This is the first time that Nike has left the SP 100. Since joining in December 2008. They had an 18 year streak of being in this SP 100. ⁓ and now they're out, right? Nike also doubled down and sent an internal memo memo to all of its executives specific ⁓ to specifically head off any confusion, right? So they clarify that it's still in the SP 500 and this doesn't affect operations, strategy, or listing. ⁓ and so analysts have like framed this as more symbolic than mechanical. ⁓ So index funds tracking the the 100 have to sell the shares, but the volume impact is pretty small. ⁓ but the bigger kind of like I guess signal that we should be more concerned about is that obviously the SP 500 is the shift towards waiting towards AI infrastructure names, right? Because that's that's where the money's at. That's where all the money's being pulled in right now. ⁓ you know, like I think it just kind of says a lot about like where we're at. I mean, and and to be fair, bro, like I was, you know, me and Tom was talking about this before we started recording, but like in my opinion, I think Nike priced itself out of like being consumer friendly. Nike has priced itself out of being consumer friendly. Like you cannot get a pair of dry, dry fit tech pants for less than like $90 now, bro. No, bro. It's like I think a combination of that, the combination of the pricing, the lack of like creativity and ingenuity from like af our like the biggest athlete names on like the shoes, like everything looks the same now, right? Thomas: Yeah, Malcolm: They're i it's crazy pricing. There's no creativity anymore. ⁓ and they're just not the brand that like I think everyone grew to love anymore. Thomas: But yeah.