Nike Share Price On Monthly Basis Marketing Essay

Nike Share Price On Monthly Basis Marketing Essay INTRODUCTION The Financial market consists of money market and capital market. Money market basically deals with the short -term debt securities, which is safe and have high liquid able investment, while capital market deals with the long-term debt securities and they are traded. For being an efficient market, the information is included quickly into the price so that the price reflects information. The current market price reflects all existing information. Efficient Market Hypothesis (EMH) is defined as the information which is quickly and efficiently included into asset prices at any point in time, so that old information cannot be used to predict future price movements. There are three level of information available as to distinguish the EMH. Strong EMH: Its a private (insider) information that is incorporated quickly into the market price and cannot be used to reap unusual trading profit. In this, the companys management is unable to make gains from the information. Semi-strong EMH: In this the information is publicly available and is reflected in the securities current market price. The public information includes past prices, companys financial statement, announcement, economic factor etc. Weak EMH: It reflects past price and volumes information from the current assets price. It is a weak form because the price is easily accessible information and no one would be able to outperform the market using this information. NYSE COMPANY BACKGROUND The New York Stock Exchange (NYSE) also known as Big Board. It is the largest and oldest stock exchange in US. It been originated back in 1792, when a group of brokers rendezvous under a tree in Manhattan and signed an agreement to do a securities trade. The NYSE employs individuals who are called specialists who deal with the selling and buying of stocks. Nike Inc., develops and designs footwear, sportswear, apparels and equipment. They make the availability of goods in Nike stores, franchisee stores and online through the website www.nikestore.com . The company mainly operates in the Europe, Americas, Africa, Asia Pacific and the Middle East. It is headquartered in Beaverton, Oregon and employs about 38,000 people. They organize, supports and sponsors main sports around the world as they think sports is the main key for being healthy and they also sponsors high profile athletes so that the people can follow their icons. Nike has a trademark logo Just Do It. ANALYSIS The purpose of a stock price analysis is to study the behavior of stock prices and thereby determine whether buying, selling or holding on to a stock would be beneficial for the investor. A stock price is basically the market price that is ascribed to it by public appreciation of the stock. Hence, analyzing stock prices gives one an idea about the price a stock would demand within a future timescale. While thoroughly analyzing the share price of two years, the company faced lots of ups and down in the share price due to several reasons. On Dec 13, 2010, Nike Inc. shares were up by 3 percent at $90.35 due to solid sneakers sale in United States, growing demand for apparels and accelerating sales in china. Analyst Michael Binetti state that China represents about 10 percent of Nikes total revenues today, and we believe Nike is focusing resources to double its China revenues over the next five years. There was a decrease in shares price of Nike by 5 percent on Dec 21, 2010 as the company was not able to satisfy the rising expectations for future orders. The delay was because across the globe there was high demand of Nike footwear and clothing and the company was not able to deliver the item on time. The downward trend of the share price was seen for the next few days because of the reason above. A high magnitude earthquake was felt in Japan on April 07, 2011 causing a downfall in the share on Nike by 3 percent. The effect was seen on the NYSE Exchange. The New York Times reported that the effect of the earthquake was felt over the market and the downfall was seen overall. Nike spokesperson stated that they will re-establish the infrastructure as soon as possible as to fulfill the people demand. The company again faced a downfall of 7 percent on March 18, 2011 as the company planned to raise the prices of the shoes and sports clothing so that they can cope up with the rising cost of cotton, oil and transportation that are hampering its profitability. The news did not have a good impact on the investors and a price overreaction was seen due to the news. Nike shares gained 4.3 percent to $84.14 on June 27, 2011 in after-hours trading when the company announced that its quarterly net income rises by 14 percent due to footwear sales increased by 20 percent, apparel revenue rose by 28 percent as they were driven by earlier shipment, strong category presentations and improved product lines of summer season products The very next day the shares price was up by 10.1 percent when Chief Executive Mark Parker told to its investors that the apparel maker and sports gears, which reported stronger fiscal growth for fourth quarter profits, is ahead of schedule in meeting its targets. The news was announced through a conference call. An overreaction was seen to this price. Shares were up by more than 5 percent on Sep 22, 2011 as sales rose by 35 percent in emerging markets and 15 percent in Greater China. Together both these regions supply about 23 percent of Nikes business. The future demand of the brand measures to be 16 percent to total $8.5 billion. There was high demand for footwear and clothing line in North America which led in rose in revenue by 15 percent to $5.8 billion which led in the rise in the share price of the company by 3 percent on March 22, 2012. On April 10, 2012 Nike did an out-of-court settlement with Reebok as Reebok used Footballer Tebows name in their apparels without having approved from Nike as Nike is authorized and licensed to use Tebows name on football related product. This news did not go good with investors as there was a downfall of share by 4 percent. The company announced to sell its two brands Cole Haan and Umbro on May 31, 2012. The news did not go good with the investors as the downfall in the share price by 2 percent on the very next day. During Olympics 2012, Egypt Olympic team claimed that they got fake Nike kit from the company. They stated that The workout bag had a big Nike logo in the front and the zipper had an Adidas branding on them. This news showed effect on the share price of the company which made a fall of 4 percent on the market on July 26, 2012. The trend was seen for few more days because of the news. (add beta coffiecient) CONCLUSION As we can look, the Efficient Market Hypothesis provides us to what type of information is available in the market and how much the investors can earn from it. Whenever new information is available in the market, the reaction can be seen on the share price. If I look into the news, I can see that the company provides semi-strong news to its investors. During the Olympics 2012, Egypt alleged that they got a fake Nike kit from the company and due to that a shares fall in the market can be seen. If we look into the news, it is semi-strong news and we can see the effect on the market. In few news we can see the overreaction and under reaction, as it helps us to understand what happens when a particular news come to the market and effect can be seen in the next few days of the market. EMH was a theory which was invented long back to know the market but now days there are software which is available in the market which can fetch us high accuracy results of the market. REFERENCES Efficient Market Hypothesis (EMH) by Alvin Han. 2013. Efficient Market Hypothesis (EMH) by Alvin Han. [ONLINE] Available at: http://www.alvinhan.com/Efficient-Market-Hypothesis.htm. [Accessed 16 January 2013]. Introduction to Stock Exchanges and the NYSE. 2013. Introduction to Stock Exchanges and the NYSE. [ONLINE] Available at: http://www.investorguide.com/igu-article-422-investing-basics-introduction-to-stock-exchanges-and-the-nyse.htm. [Accessed 16 January 2013]. Nike picks up pace, says UBS; stock hits life-high | Reuters . [ONLINE] Available at: http://www.reuters.com/article/2010/12/13/nike-research-ubs-idUSSGE6BC0B620101213. [Accessed 16 January 2013]. Nike future orders disappoint, shares fall | Reuters . 2013. Nike future orders disappoint, shares fall | Reuters . [ONLINE] Available at: http://www.reuters.com/article/2010/12/21/us-nike-idUSTRE6BK6DI20101221. [Accessed 16 January 2013]. Nike to raise prices sharply as costs hit gains | Reuters . 2013. Nike to raise prices sharply as costs hit gains | Reuters . [ONLINE] Available at: http://www.reuters.com/article/2011/03/18/us-nike-idUSTRE72G7YU20110318. [Accessed 16 January 2013]. Nike quarterly net income rises 14 percent | Reuters . 2013. Nike quarterly net income rises 14 percent | Reuters . [ONLINE] Available at: http://www.reuters.com/article/2011/06/27/us-nike-idUSTRE75Q64E20110627. [Accessed 16 January 2013]. Nike raises sales forecast; to lift prices | Reuters . 2013. Nike raises sales forecast; to lift prices | Reuters . [ONLINE] Available at: http://www.reuters.com/article/2011/06/28/us-nike-outlook-idUSTRE75R5JQ20110628. [Accessed 16 January 2013]. Strong demand, price increases help Nike top Street | Reuters . 2013. Strong demand, price increases help Nike top Street | Reuters . [ONLINE] Available at: http://www.reuters.com/article/2011/09/22/us-nike-idUSTRE78L67D20110922. [Accessed 16 January 2013]. Nike, Reebok settle Tim Tebow apparel dispute | Reuters . 2013. Nike, Reebok settle Tim Tebow apparel dispute | Reuters . [ONLINE] Available at: http://www.reuters.com/article/2012/04/10/reebok-nike-tebow-idUSL2E8FAD4C20120410. [Accessed 16 January 2013]. Nike looking to sell Cole Haan and Umbro brands | Reuters . 2013. Nike looking to sell Cole Haan and Umbro brands | Reuters . [ONLINE] Available at: http://www.reuters.com/article/2012/05/31/us-nike-colehaan-idUSBRE84U0Q520120531. [Accessed 16 January 2013]. BBC News London 2012: Egypt Olympic team get fake Nike kit. 2013. BBC News London 2012: Egypt Olympic team get fake Nike kit. [ONLINE] Available at: http://www.bbc.co.uk/news/world-middle-east-18995905. [Accessed 16 January 2013]. Market line ebsco (company background) http://blog.oregonlive.com/playbooksandprofits/2011/04/nike_report_lowers_expectation.html (april 07, 2011 news)