Just flip it
Lacing up profits with Nike
Good morning, footwear fans. This is your Stock Market Rundown for October 5th, 2023. Thanks for joining me once again. Let’s dig in:
TODAY’S TOP STORY: SWOOSH SPECULATORS 👟
Wall Street traders spend their days buying and selling stocks. But there’s another type of trader whose chosen commodity comes in brightly-coloured leather with waffle soles. I’m talking about sneaker flippers.
Globally, sneaker reselling is a $6 billion industry. The hypebeasts who run this game keep tabs on prices of the most coveted collectible pairs, via online platforms like StockX and Grailed. Resale prices are a vibe check on a brand’s cool factor: are you popping like Supreme, or cringe like Sketchers?
Nike is the longtime king of the resale universe, with the iconic Jordan brand winning the most slavish devotion. In 2021, eight of the top ten best-selling sneakers in the US were Jordans, but traditionally, demand still outstripped supply.
Lately, though, the brand is looking more beaten-up than the Keds I wear to wash the car. Jordans that once sold for $100 or more above list price, are now trading roughly at par on the resale sites.
While resale prices don’t affect Nike directly, the athletic-apparel leader is suffering from the same sentiment slowdown. They just reported a quarter that missed expectations on revenue for the first time in two years.
Still, Nike’s profits picked up versus the past few quarters, thanks to more full-price sales and not as many “30% off” signs on their shoes, which boosted the stock. If Nike can continue to avoid discounting, the V2Ks and Gamma Forces that show up under the Christmas tree will spell happy holidays for shareholders. Just buy it.
SO WHAT ELSE IS GOING ON?
Car manufacturers are peeved at the Biden administration due to stringent fuel-economy standards that’ll wallop them with billions in fines. It reeks of a shakedown, but regulators simply sniffed that if the automakers don’t like it, they can feel free to switch to electric.
Another day, another SEC fraud case: Hyzon Motors paid $25 million to settle charges they misled investors. Specifically, they claimed they sold 87 fuel-cell vehicles during a period where the actual number sold was zero. Top stock pick for anybody who wants to go long pathological liars.
Smile Direct Club, the mail-order dental-aligner company that lets you loosen your teeth while you sleep, has filed for bankruptcy. The failure comes four years after raising more than a billion dollars in an IPO. Turns out most people don’t consider orthodontia something they want to tackle as a DIY project.
Home affordability in the US is bottoming out, with the median sale price for a US single-family home at an all-time high of $420,846. Nobody’s moving except the racoons who just took up residence in your chimney.
That’s it for today, my friends; see you tomorrow morning. Yours in capitalism, The Axe