Adidas stock price has collapsed this year as concerns about its growth continued. It plunged to a low of €160, down by over 38% from its highest point this year. It has underperformed Nike, the embattled company whose stock has jumped by 48% from the YTD low.
Why Adidas stock price crashed
Adidas share price has collapsed this year as investors remains concerned about its business amid US tariffs and other macroeconomic factors.
While the company stuck with its forward guidance, it warned that the range of possible outcomes had increased. It said:
“The increased uncertainty around the possible direct and indirect impacts from higher US tariffs persists. “
The main issue is that most of its products are made in Asian countries like Vietnam, China, and Indonesia. Most Vietnamese goods brought to the US are being charged a 20% tariff, while Indonesians face a 19% levy. Chinese goods are being charged 30%.
Therefore, analysts believe that its business will see weaker demand and slimmer profits. In its recent results, the company warned that the headwind could be about €200 million.
Its recent financial results showed that its business thrived in the second quarter of the year. Revenues jumped by 12% in Q2 to €6 billion, while its operating profit shot up by 58% to €546 million.
Revenue in the first half of the year rose by 14%, while its operating profit soared by 70% to €1.2 billion.
The bullish case for Adidas
The ongoing Adidas share price crash could be a good opportunity for long-term investors for a few reasons.
First, the company’s results showed that its business continued its growth despite the challenges in the second quarter. Remember, Donald Trump’s tariffs remained in place during the quarter.
Second, the company’s forward guidance was relatively strong. It expects that the operating profit for the year will be between €1.7 billion and €1.8 billion, helped by its gross margin expansion.
Third, the company’s valuation has improved during the ongoing stock crash. It now trades with a forward price-to-earnings ratio of 21.8, which is not bad for a company that has experienced double-digit revenue growth. Indeed, its PEG ratio of 0.05 shows how cheap it is.
Additionally, its sales growth is balanced across various channels. Its wholesale business rose by 14%, while its own retail and e-commerce grew by 9% and 9%. Wholesale accounted for 61% of sales, while direct-to-consumer, own retail, and e-commerce accounted for 39%, 22%, and 17% of the sales.
Adidas share price could also mirror the performance of Nike, its biggest competitor, whose stock has rebounded in the past few months.
Adidas share price analysis
Adidas stock price chart | Source: TradingView
The daily chart shows that the Adidas stock price has crashed in the past few months, moving from a high of €261 in February to €166 today. It recently moved below the important support level at €173.70, its lowest level in April.
Adidas stock price has plunged below all moving averages, a sign that bears are in control. It has also formed the bearish flag pattern, which is made up of a vertical line and some consolidation.
Therefore, the stock price will likely continue falling as sellers target the support at €150. This decline will likely be a good buying opportunity as the stock will bounce back as investors embrace the new normal of tariffs.
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