Nike (NKE) stock slid about 1% on Wednesday, briefly trading at $40, its lowest level in about 12 years. The fall came despite an earnings beat, because most of the profit came from a one-time tariff refund.

That refund flattered the headline number and did nothing to fix Nike’s shrinking sales. Wall Street responded by trimming price targets, and the charts now point to more downside.

Why the Earnings Beat Triggered Target Cuts

Here is the earnings loophole the title promised. Nike reported a profit of $0.20 per share and beat the $0.13 that Wall Street expected. But most of that profit did not come from selling shoes.

About $0.52 per share (a large part of the $0.72 EPS) came from a $986 million tariff refund, money the government returned after the Supreme Court struck down many of the levies. That is a one-time payment, not a recurring business model.

Take the refund away, and Nike still looks weak. Sales slipped to $10.97 billion, and sales in China fell 12%.

The market response shows how little faith investors have. A monthly chart from earlier shows Nike has now given back its entire pandemic-era run and sits back at prices last seen in early 2014.

Because the profit was a one-off, analysts cut their price targets instead of raising them. Goldman Sachs trimmed its target to $42 from $46 post-results, and JPMorgan cut to $47 from $52.

UBS stayed the most constructive at $48. Jefferies remains the lone bull among these analysts at $90.

Even so, most reduced targets sit only slightly above the last close near $41. In other words, the Nike stock price upside is not what analysts are betting on right now.

The soft outlook has therefore shifted attention to traders’ positioning.

Bearish Bets Are Building Against Nike Stock

Options traders turned defensive fast. The put-call ratio, which compares bearish put bets to bullish call bets, jumped to 1.14 on June 30 from 0.53 on June 26.

A ratio above 1 means puts now outnumber calls. That marks a sharp swing toward hedging and downside bets around nike earnings.

Meanwhile, volume tells the same story. Nike traded 73.89 million shares, its second-heaviest session since early April, and it came on a down day.

Additionally, Chaikin Money Flow (CMF), a proxy for institutional buying and selling pressure, sits at -0.29. The deep negative reading suggests big money is not stepping in to catch the fall.

More so when the Nike price chart clearly shows a bearish head-and-shoulders pattern with a 14% potential dip.

With flows and positioning aligned bearishly, the price chart becomes the decider.

Nike Stock Price Levels to Watch

The daily chart shows a head-and-shoulders pattern. Nike’s head formed near $47, with a right shoulder around $42.

The neckline now sits near $39, roughly 3% below the last close. A clean break there would confirm the pattern and open the door toward $38 as the first bearish target.

Below that, the measured move points to about $34, with $33 as the deeper extension target. That path frames the dramatic downside now in play.

The bulls still have a case, but it needs work. Nike must reclaim $41 quickly, and a daily close above $42 would signal real strength, the same level analysts already expect the stock to prove.

A push over $43 would improve the tone, while a move above $46 would weaken the bearish setup. Moreover, a clean daily break above $47 cancels the pattern entirely. Traders should note that head-and-shoulders patterns only confirm once the neckline breaks on volume, and failed breakdowns are common.

For now, the $39 neckline separates a slow base-building recovery from a deeper slide toward $34.

Source: BeInCrypto