Shares of Nike and Adidas May Perform Well During The World Cup

While 32 nations compete for the World Cup in Qatar, both Adidas and Nike are keeping their fingers crossed that their stocks will do well.

With FIFA estimating that at least 5 billion people will watch the game, the most prominent soccer competition in the world presents a significant chance for manufacturers of sports gear to sell their jerseys, boots, and other products with teams and individual players.

During the month-long 2018 World Cup, shares of Adidas fell by 6% because the widely favored Germany, which played on an Adidas squad, was eliminated in the group stage. Conversely, France, which played on a Nike team, won the FIFA tournament. During the same time period, Nike’s gain of 4% was higher than the S&P 500’s gain of 1%.

During the quarterly conference call that Adidas held on November 9, the company stated that it anticipates World Cup-related revenues of approximately 400 euros ($415 million), which would equate to approximately 2% of additional yearly revenue.

A request for Nike to comment on the significance of the World Cup to the company’s sales was not immediately met with a response from the company.

The excitement surrounding the World Cup and team jerseys can provide a halo effect that drives sales of other kinds of merchandise, according to Tom Nikic, an analyst at Wedbush. This is true even though soccer-related merchandise only accounts for a small portion of both Adidas and Nike’s overall businesses.

“Do people in Germany buy a new set of shoes whenever they purchase a World Cup jersey? Or, if a team that is sponsored by Adidas ends up winning the whole thing, does the excitement that comes along with winning the World Cup cause people to buy more shirts than they normally would have? That’s where you’ll find some differences in approach, “Nikic remarked.

Advertisement

As a result of the fact that Nike is supplying World Cup jerseys to 13 teams, including Brazil, France, and the United States, the company has surpassed Adidas as the market leader in this particular category. A total of seven teams, including soccer powerhouses Germany, Spain, and Argentina, will be wearing jerseys manufactured by Adidas.

Puma is providing jerseys for six of the teams, while New Balance and other firms are providing jerseys for the remaining teams.

After day four of the World Cup, teams wearing Nike have gained a total of 15 points, while teams wearing Adidas have accumulated a total of 11 points.

Shares of Nike have increased by more than 1 percent so far throughout the tournament, while those of Adidas and Puma have both decreased by more than 3 percent.

Nike teams Brazil and France are presently favored as the most likely to win the 2022 Cup, according to current betting odds.

Change in percentage during cup at the time of this writing.

Nike Inc 0.6% 1.2%

Adidas AG 1.1% -3.8%

Advertisement

Puma SE -0.2% -3.5%