Nike: Just Buy It?
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By Daniel Mahncke & Shawn O'Malley · April 13, 2025
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There are very few companies where the brand name and logo immediately come to mind when you think of an industry or product.
Phones? Apple.
Search? Google.
Shoes? Nike.
Nike is one of those rare businesses that doesn't just sell products — it shapes culture, identity, and aspiration. But despite that iconic status, the company is facing one of the most challenging stretches in its modern history.
Sales are slowing, margins are under pressure, and tariffs threaten the entire supply chain. Add to that a shaky DTC strategy, strained wholesale relationships, and a stretch of underwhelming innovation, and you’ve got a company in the middle of a full-blown reset.
Today’s question is whether Nike can get back on track and whether the opportunity is attractive enough to add the stock to our The Intrinsic Value Portfolio (featured at the bottom of this newsletter).
Let’s dive in.
— Daniel
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Nike: Just Buy It?
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From the Track to the Racks
Nike’s story starts on a track in Oregon. In the 1960s, University track coach Bill Bowerman teamed up with his former student Phil Knight to sell high-quality Japanese running shoes in the U.S. under the name Blue Ribbon Sports.
Their inspiration? Japanese cameras. At the time, brands like Canon and Nikon were taking market share from dominant German makers. Bowerman and Knight believed the same disruption could happen in footwear, where Adidas and Puma ruled the track.
So they partnered with Japanese shoe manufacturer Onitsuka Tiger, and the business took off. Sales grew, momentum built — until they found out Onitsuka was quietly shopping for new U.S. distributors behind their back.
Feeling betrayed, Bowerman and Knight made a bold decision: go solo. No more reselling — they’d make their own shoes.
And just like that, Nike was born. One of the most iconic brands in the world was created in a matter of days. The name “Nike” came from the Greek goddess of victory. The Swoosh? Designed by a college student for $35.
But don’t worry — a few years later, Knight gave her 500 shares of Nike. If she held on, that little logo turned her into a millionaire.
Nike’s early strategy was simple but effective: selling shoes straight out of car trunks at track meets, building personal relationships with runners, and even creating one of the first informal customer databases — tracking shoe sizes, race schedules, and athlete preferences to stay connected. It worked. The first 50,000 pairs were sold almost entirely through word of mouth.
One of the most iconic early models was the Moon Shoe — designed by Bowerman and inspired by his attempt to improve traction using a waffle iron from his kitchen.
Perhaps the first signal of just how far Bowerman and Knight were willing to go to build the best running shoes in the world — and the Moon Shoe became their first true breakthrough.
From there, Nike’s innovation streak took off: the Waffle Trainer, Air cushioning in the Tailwind, and later the futuristic Nike Shox, made famous by Vince Carter’s Olympic dunk over a 7'2" Frenchman in 2000.
The Best Deal in Sports History
While Nike’s early models laid the foundation for its reputation in performance and innovation, what truly catapulted the company into global dominance was arguably the greatest marketing move in sports history.
In October 1984, Nike signed a young, promising rookie named Michael Jordan. It wasn’t an easy deal — Jordan had his heart set on Adidas, but they weren’t focused on basketball then. Nike saw the opportunity and took a bold swing.
They offered him a five-year, $2.5 million contract, which, at the time, was basically their entire marketing budget, and built an entire brand around him. The goal was to sell $1 million worth of Air Jordans in the first year.
Instead, they sold $126 million.
That single bet didn’t just change Nike’s trajectory — it redefined how athletes, brands, and marketing would work for decades to come.
The Landscape is Changing
For a long time, there were two dominant players in the global footwear and apparel industry: Nike and Adidas. And yes — both still lead the pack. But the momentum has...