“My Ahhh-didas!” the quintessential hip hop anthem of 1986.
Run D.M.C penned that classic and with it some say the hip hop sneaker culture was born. Shell-toe “Superstar” Adidas graced the feet of every one who was anyone, along with those rope chains and track suites. Sources indicate that this was the very first rap endorsement deal.
This union would birth the now coined “sneaker-head” forever changing both the sneaker industry and urban communities alike. Thirty one years later the sneaker industry continues to profit tremendously from the urban community’s obsession with having the latest release.
While Adidas took its gamble on rap legends, the sneaker industry had already been moonlighting with sports heroes such as Barkley and our beloved Jordan. The greats landed their slam dunks and jump shots on prime time television while millions of fans watched. Sneaker giants like Nike maximized on those marketing opportunities and their stock prices soared as result.
Nike has long dominated the sneaker industry and had become synonymous with a sure bet in the trading world, however the tides have seemingly begun to take a turn.
Since 2015 Nike[NKE] has been losing overall traction with investors and sneaker-heads equally. There has been a 16% drop in their stock since that time, landing them at around $52 a share in comparison to Adidas $118 per share. This has been primarily due to its retail partner’s slow response to the growth of e-commerce and Adidas becoming a threat.
In the wake of Nike’s sharp decline Adidas has more the doubled their market share over the last two years and is trending to continue its climb for years to come.
Adidas[ADDYY] last quarter sales has jumped 45% while Nike has remained flat. The German company is unintentionally benefiting from Nikes slowed demand, while sneakerheads continue to influence the pricing of the shoes in secondary markets. Think Kayne’s Yeezys on sites like StockX and Flighclub going between $600-$2300 a pop.
Furthermore, the successful purchase of Reebok in 2006 and its shift in design direction has gained them more fandom in the US market positioning them as a formidable foe to Nike.
Fashion trends have begun to swing in favor of trendy threads rather than athletic wear. Last year Adidas capitalized on this brilliantly by opening a new design hub in Brooklyn, New York to keep its finger on the pulse of consumer demand.To throw more salt in the would they have moved their headquarters from Germany to a stone’s throw away from Nike’s headquarters in Portland, Oregon, only 30 minutes down the street.
Wall Street outlook is grim on Nike and highly enthusiastic on Adidas. Thoughts are that Nike may bounce back in about two years but expects growth to continue for Adidas over the next four years.
For all my sneaker enthusiasts you may want to cop to stay ahead of the fashion and stock trend. Take ownership in the labels you like to rock and build your wealth, while staying fly. With that I will say happy trading Wallstreet Jackboyz and Girlz!!