Adidas Stock Price Struggles Following Yeezy Line Decision

Summary:

Adidas stock price has been in a downward trend throughout the year, which has seen its value dropping by over 60 per cent year-to-date.

Adidas stock price has been in a downward trend throughout the year, which has seen its value dropping by over 60 per cent year-to-date. However, this month, the downward trend looks to have accelerated, which has seen the company’s value dropping by 16 per cent.

Part of the reason for the recent price drops has been due to the ongoing controversy involving Kanye’s Yeezy line, which many analysts indicate might cost the company more than $650 million. Although the decision to terminate Kany’s contract has been termed by many as the right decision, its financial implications is likely to see the company continue suffering in the markets for the next few months.

The company has already disclosed an estimated $247 million from lost sales of the famous Yeezy line. The company also slashed its profit margin expectation from 7 per cent to 4 per cent, partly due to the ongoing inventory problems and a decline in sales in China.

Adidas Stock Price Forecast

Following the company’s latest decision to cut Yeezy’s line from their productions, the company has been left with a $247 million revenue hole that will be a challenge to fill. In the past few weeks, the company has also suffered a PR nightmare following their reluctance to cut ties with the famed artist, which has seen even some of its ardent customers pull away from the brand.

Looking at the chart below, the company’s latest mishaps add to its growing problems in the markets, which has seen its price drop to a six-year low. Based on the chart below, the current aggressive trend to the downside also looks to be on course to set new price lows in the coming months.

Therefore, my Adidas stock price prediction expects it to trade below the €80 price level in the coming month. There is a high likelihood that its price may even be close lower, considering the amount of revenue it stands to lose. However, a trade above the €110 price level will invalidate my bearish analysis.