Nike shares drop after choice of Colin Kaepernick for ad spurs boycott

Protesters burned their Nike shoes, investors sold shares and some consumers demanded a boycott after the footwear and apparel maker launched an advertising campaign featuring Colin Kaepernick, the NFL quarterback who sparked a national controversy by kneeling during the national anthem.

But the brand recognition that comes with the campaign may be just what the company wanted, and marketing experts predicted it would ultimately succeed.

The ad revived a raging debate in the United States that started in 2016 when Kaepernick, then with the San Francisco 49ers, began kneeling during the playing of the U.S. national anthem to protest multiple police shootings of unarmed black men.

While some fans praised Kaepernick and other players who joined him in kneeling as patriotic dissenters, critics led by U.S. President Donald Trump blasted the protesters as ungrateful and disrespectful.

In the immediate backlash to the campaign, announced on Monday, Nike shares fell nearly four per cent at one point on Tuesday and closed down 3.2 per cent.

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Calls for a boycott fed social media buzz about the campaign. There were 2.7 million mentions of Nike over the previous 24 hours, the social media analysis firm Talkwalker said at midday, an increase of 135 per cent over the previous week.

"This is right on the money for Nike. They stand for this irreverent, rebellious attitude. In this case, it's reinforcing the brand," said Erich Joachimsthaler, CEO of strategy consulting firm Vivaldi.

After his protests, Kaepernick could not find a job for the 2017 season and sued the National Football League, accusing owners of colluding to blackball him. He is still without a team.

Nike has sponsored Kaepernick since 2011 and said he will be one of several faces for a campaign marking the 30th anniversary of its "Just Do It" slogan.

The ad refers to Kaepernick's loss of NFL income with the quote: "Believe in something. Even if it means sacrificing everything."

"I think it's a terrible message," Trump, speaking to The Daily Caller. "Nike is a tenant of mine (in a building at 6 East 57th St. inNew York). They pay a lot of rent."

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When discussing the matter further, Trump said he doesn't like Nike's decisionbut also respects the company's right to hire the spokesperson it chooses.

"As much as I disagree with the Colin Kaepernick endorsement, in another way I mean, I wouldn't have done it," Trump said. "In another way, it is whatthis country is all about, that you have certain freedoms to do things thatother people think you shouldn't do, but I personally am on a different sideof it."

Others offended by the choice posted social media pictures of Nike shoes they had set on fire or socks with the Nike swoosh cut out.

The decision has prompted a strong reaction on both sides. Watch the video below for a look at all the different impacts.

Twitter user Sean Clancy, or @sclancy79, posted a picture of a pair of Nike trainers on fire on Tuesday that was retweeted 20,000 times.

Athletes including LeBron James, Kevin Durant, Chris Paul and Serena Williams showed support.

In emotional remarks, James paid tribute to the three women in his life his mother, wife and three-year-old daughter, whom he held on the podium at a Manhattan fashion event as he spoke. Closing his remarks, he said he stood "for anybody who believes in change." He added: "I stand with Nike, all day, every day."

The controversy may have been a convenient excuse for some investors to sell an overvalued stock, Joachimsthaler said.

Christopher Svezia, a footwear and apparel analyst at Wedbush Securities Inc., said Nike shares were trading at roughly 30 times next year's forecast earnings, compared with 24 per cent for rival Adidas.

"Nike more than anyone else really knows who their customer is," Svezia said, describing them as largely 14- to 22-year-old males.

Matt Powell, a senior adviser with market research firm NPD Group, predicted the boycott would fizzle. "Old angry white guys are not a core demographic for Nike," he said.

Barry Lowenthal, CEO of The Media Kitchen, praised the campaign and said Nike has long proven successful in using celebrity endorsements to promote its brand, a precursor to what is known as influencer marking in the social media age.

"These kind of endorsement deals were the first version of influencer marketing. Of course they know it works. It's classic product placement," Lowenthal said.

Other brands have faced backlash for straying into politics.

Under Armour faced criticism last year after its chief executive made comments supporting Trump, and Adidas drew calls in May to cut its ties to rapper Kanye West after he described slavery as a choice and praised Trump.

"We don't hear much about it today," said Jessica Ramirez, a retail analyst with Jane Hali & Associates.

Even former Iranian presidentMahmoudAhmadinejad weighed in with a tweet supportingKaepernick.

Nike, which on Monday called Kaepernick "one of the inspirational athletes of his generation," did not respond to requests for comment on Tuesday.