By Spencer Kellogg | @Spencer_Kellogg
Nike (NKE -3.16%) took a sharp beating on Tuesday after the Oregon shoe company announced Colin Kaepernick as the star of their new hyperpolitical advertising campaign. In what was described as a “terrible message” by President Trump, the former NFL quarterback is seen staring blankly into a camera as the text “Believe in something, even if it means sacrificing everything” stretches across the image.
— Colin Kaepernick (@Kaepernick7) September 3, 2018
The conservative blogosphere erupted (of course) in anger over the move by burning Nike shoes and circulating the hashtag #BoycottNike across social media platforms. For many on the political right, Kaepernick’s kneeling in protest of police brutality during the national anthem of NFL games was tantamount to treason. Kaepernick led the 49ers to the NFC Championship in 2013 but quickly became unemployable after the protest as all 32 franchise owners decided he wasn’t worth the PR risk.
— John Rich (@johnrich) September 3, 2018
Forbes suggested the company’s multi-billion dollar nosedive was an expected pullback and that Kaepernick’s campaign was merely the trigger. The Ringer, meanwhile, called the campaign a “Big Gamble” and suggested that Nike had “hired an activist, not just an athlete.” Oppenheimer analyst Brian Nagel saw the move as a forward facing positive risk for a company that is celebrating the 30th anniversary of its monumental “Just Do It” campaign.
Writing to investment clients, Nagel believes the debate surrounding the controversial athlete bodes well for Nike: “Our initial take: We commend Nike for its willingness to partake in a more edgy, risky advertising campaign while refreshing its 30-year old ‘Just Do it’ campaign.”
Look!!! The new @Kaepernick7 ad on top of @Nike's store in San Francisco #justdoit "Believe in something. Even if it means sacrificing everything." Video via NBC Bay Area Feed. If you’re in Union Square SF take a selfie w Kap #imwithkap Show your support ❤️ pic.twitter.com/ef71UBs27v
— NESSA (@nessnitty) September 5, 2018
So why the tumble in share price? Investors don’t particularly like risk and right now, Kaepernick is as risky as it gets. Nike’s decision to sign a deal with Kaepernick along with other young superstars like Serena Williams, LeBron James, and Odell Beckham Jr. suggests that the company is looking at a younger, diverse demographic to spur on sales. A CNN poll conducted last year appears to confirm the hypothesis:
Among whites, 59% say the players are doing the wrong thing while 82% of blacks say it’s the right thing to do. Almost 9 in 10 Republicans say it’s the wrong thing (87%) while just about three-quarters of Democrats say the opposite (72%). And most younger Americans call it the right thing (56% among those under age 45) while a majority of older Americans say it’s wrong (59% among those age 45 or older). – CNN
While the NFL had hoped they could simply blacklist players that dared to protest the national anthem by keeping them off team rosters, arbitrator Stephen B. Burbank announced this week that Kaepernick’s collusion lawsuit against the NFL would go ahead. How the ongoing saga will affect Nike’s valuation moving forward will be decided in the coming weeks and months but for now, the shoe giant is marking very clearly where they stand politically and taking a big economic hit in the process.