Portrait Weekly Winners & Losers: NKE & HIMS
Welcome to this week's edition of the Portrait Weekly Winners & Losers. This week, we'll take a look at Nike (NKE) and Hims & Hers Health (HIMS).
This week saw dramatic contrasts as Nike surged following earnings that signaled the worst of its strategic reset was behind the company, while Hims & Hers Health plummeted after Novo Nordisk abruptly terminated their partnership over alleged regulatory violations.
Nike (NKE)
Nike's stock soared despite posting objectively poor Q4 2025 results, as investors focused on management's signal that the company had reached an inflection point in its turnaround efforts.
What happened?
Using Portrait, we discover that Nike's strong performance was driven by the company finally meeting severely depressed expectations while providing encouraging forward guidance that suggested the worst of its restructuring pain was over.
What Happened: Meeting the Bottom and Signaling Recovery
The primary driver of Nike's sharp positive stock reaction was the company delivering results that, while objectively poor, met management's previously established expectations for what would be the "largest financial impact" quarter from its restructuring efforts, combined with guidance suggesting the worst was behind them.
The Numbers That Mattered Most:
Nike reported Q4 2025 revenue of $11.1 billion (down 12% reported, 11% currency-neutral) and earnings per share of $0.14 (down 86% year-over-year), with gross margins declining 440 basis points to 40.3% (NKE 8-K 06/26/25 Earnings Release). However, these results were characterized by management as "in-line with our expectations" despite being well below historical performance standards (NKE 8-K 06/26/25 Earnings Release).The Forward-Looking Catalyst:
The key catalyst for the positive reaction was CFO Matthew Friend's guidance that "the fourth quarter reflected the largest financial impact from our Win Now actions, and we expect the headwinds to moderate from here" (NIKE, Inc., Q4 2025 Earnings Call, Jun 26, 2025). This signaled to investors that the company had reached an inflection point in its turnaround efforts.Strategic Progress Under New Leadership:
CEO Elliott Hill, who returned to Nike in October 2024, outlined the implementation of a "sport offense" realignment focusing on sport-specific teams rather than traditional demographic segments, representing a fundamental shift back to Nike's athletic roots (NIKE, Inc., Q4 2025 Earnings Call, Jun 26, 2025). The market interpreted this as a credible path forward given Hill's 32-year Nike tenure and deep understanding of the company's core strengths.Tariff Mitigation Strategy:
Despite facing an estimated $1 billion gross incremental cost increase from new tariffs, Nike presented a comprehensive mitigation strategy including supply chain diversification, partner arrangements, and selective price increases, with plans to "fully mitigate the impact of these headwinds over time" (NIKE, Inc., Q4 2025 Earnings Call, Jun 26, 2025).
What signs were there, in hindsight?
Looking back through the past 6-12 months, we learn that Nike had been systematically building toward this inflection point under new leadership while progressively lowering investor expectations.
What Signs Were There, In Hindsight: A Turnaround Taking Shape
Several indicators available prior to the earnings release suggested Nike was positioning for a potential inflection point, though the magnitude of the market's positive reaction was difficult to predict given the company's extended period of underperformance.
New Leadership with Proven Track Record:
Elliott Hill's appointment as CEO in October 2024 represented a significant strategic shift, as the market had been calling for management changes throughout 2024 (NKE 8-K 09/19/24 Departure of Directors or Certain Officers). Hill's extensive Nike experience, including his role in growing the business to over $39 billion during his previous tenure, provided credibility that was lacking under previous leadership.Progressive Deterioration Setting Low Bar:
Nike's performance had deteriorated consistently throughout fiscal 2024 and 2025, with revenue declining from $51.4 billion in fiscal 2024 to $46.3 billion in fiscal 2025 (NKE 8-K 06/26/25 Earnings Release, NKE 8-K 06/27/24 Earnings Release). This progressive weakening had systematically lowered investor expectations, creating conditions where meeting guidance could drive positive reactions.Organizational Restructuring Momentum:
The Q2 2025 earnings call in December 2024 showed Hill implementing aggressive marketplace cleanup actions and organizational changes, with management indicating these efforts would create "greater headwind to the fourth quarter compared to the third quarter" (NIKE, Inc., Q2 2025 Earnings Call, Dec 19, 2024). This telegraphed that Q4 would represent peak pain from restructuring efforts.Early Performance Product Momentum:
Nike had been highlighting growing momentum in performance categories, with running returning to growth and basketball showing strong performance, particularly in women's segments (NIKE, Inc., Q4 2025 Earnings Call, Jun 26, 2025). These early wins in core athletic categories provided evidence that Hill's sport-focused strategy was gaining traction.Classic Franchise Rightsizing Progress:
The company had been aggressively managing down its classic footwear franchises (Air Force 1, Dunk, Air Jordan 1), which represented approximately a $1 billion revenue headwind in fiscal 2025 but created space for new product innovation (NIKE, Inc., Q4 2025 Earnings Call, Jun 26, 2025).
Who else might be impacted, and what next?
Interestingly, Nike's renewed focus on sport performance could pressure competitors while creating new opportunities across the athletic ecosystem.
Who Else Might Be Impacted, and What Next: Ripple Effects and Strategic Implications
Nike's apparent turnaround trajectory carries significant implications across the athletic apparel and footwear ecosystem, while the company's forward path remains dependent on successful execution of its sport offense strategy.
Competitive Implications:
Nike's renewed focus on sport performance could pressure competitors who have gained market share during Nike's struggles. Companies like On Running, Hoka (Deckers), and other performance-focused brands may face increased competition as Nike reallocates resources toward innovation and athlete partnerships (NIKE, Inc., Q4 2025 Earnings Call, Jun 26, 2025). Nike's emphasis on reclaiming its innovation edge through accelerated product development could force industry-wide increases in R&D spending.Retail Partner Dynamics:
Nike's commitment to an "integrated marketplace" approach, balancing direct-to-consumer with wholesale partnerships, should benefit key retail partners like Foot Locker, Dick's Sporting Goods, and JD Sports (NIKE, Inc., Q4 2025 Earnings Call, Jun 26, 2025). The company's new partnership with Amazon, beginning in Q1 2026, represents a significant strategic shift that could reshape athletic retail distribution.Supply Chain and Manufacturing:
Nike's plan to reduce China sourcing from 16% to high single digits by the end of fiscal 2026 will create opportunities for manufacturing partners in other countries while potentially impacting Chinese suppliers (NIKE, Inc., Q4 2025 Earnings Call, Jun 26, 2025). The company's comprehensive tariff mitigation strategy could serve as a template for other multinational corporations facing similar trade pressures.Future Path for Nike:
The company's success will depend on executing its sport offense realignment across five key sports (running, basketball, football, training, sportswear) while maintaining focus on three key countries (United States, China, United Kingdom) and five key cities (NIKE, Inc., Q4 2025 Earnings Call, Jun 26, 2025). Nike expects momentum in performance products to continue throughout fiscal 2026, with the potential for sustainable growth contingent on successful marketplace cleanup and new product scaling.Investment Implications:
Nike's massive scale ($46.3 billion in annual revenue) means successful turnaround execution could drive substantial absolute value creation, while the company's strong balance sheet ($9.2 billion in cash and short-term investments) provides flexibility for continued investment in brand marketing and innovation (NKE 8-K 06/26/25 Earnings Release).
Looking ahead, the market will be closely watching Nike's ability to execute its sport offense realignment across five key sports while maintaining focus on three key countries and five key cities. Nike expects momentum in performance products to continue throughout fiscal 2026, with the potential for sustainable growth contingent on successful marketplace cleanup and new product scaling. The central debate now centers on whether Nike's turnaround is genuine or merely a temporary reprieve, with bulls emphasizing new leadership credibility and early performance momentum while bears argue the company's challenges are more structural than cyclical, requiring years of sustained execution to reverse fundamental market share losses to smaller, more agile competitors.
Key Debates: Bulls vs. Bears on Nike's Path Forward
The post-earnings market reaction has crystallized several key debates about Nike's investment thesis and execution capabilities going forward.
Debate 1: Timing and Magnitude of Recovery
Bulls argue that Nike has reached a genuine inflection point, with Q4 2025 representing peak headwinds from restructuring efforts and new leadership providing credible strategy execution. They point to early momentum in performance categories and successful inventory cleanup as evidence of operational progress.Bears contend that Nike's challenges are more structural than cyclical, with fundamental market share losses to smaller, more agile competitors requiring years of sustained execution to reverse. They emphasize that revenue declined 10% in fiscal 2025 despite significant investment in turnaround efforts.
Debate 2: Effectiveness of Sport Offense Strategy
Bulls view the sport offense realignment as a return to Nike's core competencies, leveraging the company's unmatched athlete relationships and innovation capabilities across specific sports rather than broad demographic segments. They argue this approach will drive product differentiation and margin expansion.Bears question whether organizational restructuring alone can address competitive pressures, particularly in lifestyle segments where Nike has lost significant ground. They worry that sport-specific focus may limit crossover appeal and total addressable market expansion.
Debate 3: China Market Recovery Potential
Bulls believe Nike's long-term position in China remains strong given the company's brand equity and 40+ years of market presence, with current weakness reflecting temporary macroeconomic factors rather than permanent brand deterioration. They expect the refreshed marketplace strategy to gradually restore growth.Bears argue that rising nationalism and strengthening local competitors have fundamentally altered the competitive landscape in China, making Nike's recovery more challenging and potentially limiting the market's long-term growth contribution.
Debate 4: Tariff Impact and Margin Recovery
Bulls emphasize Nike's comprehensive tariff mitigation strategy and strong pricing power, arguing the company can successfully navigate trade headwinds while maintaining market position. They expect margin recovery as restructuring benefits materialize and pricing actions take effect.Bears worry that persistent tariff pressures and increased promotional activity to clear inventory will structurally impair margins, particularly given Nike's significant exposure to Vietnam and China manufacturing. They question whether pricing increases can be sustained without further market share erosion.
The resolution of these debates will largely depend on Nike's ability to demonstrate sustained momentum in performance categories, successful marketplace cleanup, and effective execution of its sport offense strategy over the coming quarters.
Hims & Hers Health (HIMS)
Hims & Hers Health's stock collapsed following Novo Nordisk's abrupt termination of their partnership over alleged regulatory violations, eliminating a key growth catalyst and raising serious compliance questions.
What happened?
Using Portrait, we discover that HIMS's dramatic decline was triggered by Novo Nordisk's sudden decision to cancel their partnership, citing concerns over alleged "illegal mass compounding practices" and "deceptive marketing."
Partnership Termination Triggers Market Rout
The immediate catalyst for HIMS's sharp decline was Novo Nordisk's sudden decision on June 23, 2025, to cancel their partnership that had been established earlier in 2025. This collaboration was viewed as a significant milestone for HIMS, providing access to Novo Nordisk's blockbuster weight-loss drug Wegovy through the HIMS platform (Web - Research - HIMS.UP).
Novo Nordisk's public statement specifically highlighted concerns over HIMS's continued sale of compounded versions of semaglutide (Wegovy's active ingredient) and alleged deceptive marketing practices. The pharmaceutical company cited "illegal mass compounding" and "failure to adhere to the law prohibiting mass sales of compounded drugs" as core reasons for terminating the relationship (Web - Research - HIMS.UP). This announcement triggered an immediate high-volume sell-off, erasing several months of gains and approximately 23% of the company's market capitalization (Web - Research - HIMS.UP).
The partnership's cancellation was particularly damaging because it represented validation from a major pharmaceutical player and was seen as a blueprint for future collaborations. As HIMS management had noted in their Q1 2025 earnings call, "This collaboration also signals something important, trust from a major pharmaceutical leader, and it sets the blueprint for future partnerships that can expand both our reach and our relevance" (Hims & Hers Health, Inc., Q1 2025 Earnings Call, May 05, 2025).
What signs were there, in hindsight?
In hindsight, several developments throughout 2024 and early 2025 provided clear signals that such an outcome was possible, though the specific risk to the Novo Nordisk partnership was not explicitly apparent.
Warning Signs Were Present in Regulatory Landscape
The regulatory environment had been tightening around compounded GLP-1s throughout 2024. The FDA began resolving drug shortages that had previously allowed compounding, starting with tirzepatide in December 2024 and semaglutide in February 2025 (News - December 2024 - HIMS.UP, News - February 2025 - HIMS.UP). When the FDA resolved the semaglutide shortage in February 2025, it marked a significant shift that constrained HIMS's ability to continue providing access to compounded semaglutide once current inventory was sold (HIMS 8-K 02/24/25 Earnings Release).
Legislative scrutiny had also been mounting. In September 2024, Senators Durbin and Braun introduced the "Protecting Patients from Deceptive Drug Ads Online Act," which specifically targeted "false and misleading prescription drug promotions" by influencers and telehealth companies, with provisions allowing the FDA to issue warning letters and fines for inaccurate statements or failure to disclose risks (News - September 2024 - HIMS.UP).
Additionally, Novo Nordisk had been actively lobbying against compounded GLP-1s throughout 2024. The company submitted documentation to the FDA seeking to get semaglutide products added to the Demonstrable Difficulties for Compounding lists, arguing that GLP-1s were too complex to be safely compounded by pharmacies (News - October 2024 - HIMS.UP). Novo Nordisk also filed citizen petitions requesting the FDA to exclude both semaglutide and liraglutide from compounding allowances (News - January 2025 - HIMS.UP).
Previous partnership tensions also provided warning signals. In April 2025, when HIMS announced expanded access to Eli Lilly's Zepbound, Lilly quickly issued a statement clarifying it had "no affiliation" with HIMS, causing the stock to decline (News - April 2025 - HIMS.UP). This episode demonstrated the pharmaceutical industry's sensitivity to associations with telehealth companies engaged in compounding practices.
Who else might be impacted, and what next?
Analyzing HIMS's situation, we learn that the partnership termination has significant implications across the telehealth ecosystem while forcing strategic pivots for the company.
Broader Industry Impact and Path Forward
The partnership cancellation has significant implications across multiple stakeholder groups. Competitors in the telehealth space, particularly those offering compounded GLP-1s such as Ro and LifeMD, may face increased scrutiny from potential pharmaceutical partners and regulators. Pharmaceutical companies are likely to implement more stringent partnership criteria, focusing heavily on regulatory compliance and marketing practices before engaging with digital health platforms.
HIMS customers may experience reduced treatment options or increased uncertainty regarding product quality and legitimacy. The company had built significant momentum in weight loss, with the specialty contributing meaningful revenue growth, and the loss of this partnership creates uncertainty about continued access to branded medications (Hims & Hers Health, Inc., Q1 2025 Earnings Call, May 05, 2025).
For HIMS specifically, the path forward requires immediate attention to regulatory compliance and credibility restoration. The company must demonstrate a clear commitment to operating within regulatory guidelines while seeking alternative growth strategies. HIMS has been diversifying beyond GLP-1s through acquisitions like the European digital health platform ZAVA and investments in lab testing capabilities (News - June 2025 - HIMS.UP, HIMS 8-K 02/24/25 Earnings Release). However, these initiatives may take time to offset the loss of a flagship pharmaceutical partnership.
The company's strong core business metrics provide some foundation for recovery. Revenue excluding GLP-1s had been growing robustly, with the platform achieving $1.2 billion in revenue outside of GLP-1 offerings in 2024, representing 43% year-over-year growth (HIMS 8-K 02/24/25 Earnings Release). The company's personalized medicine capabilities, with over 60% of subscribers utilizing personalized solutions, and its expansion into new specialties like low testosterone and menopausal support represent potential alternative growth drivers (HIMS 8-K 05/05/25 Earnings Release).
For HIMS specifically, the path forward requires immediate attention to regulatory compliance and credibility restoration.
Key Investment Debates Post-Partnership Termination
The Bull Case centers on HIMS's fundamental business strength beyond the weight loss controversy. Supporters argue that the company's core telehealth platform remains robust and diversified across multiple therapeutic areas including sexual health, mental health, and dermatology. The platform had demonstrated strong growth across non-GLP-1 specialties, with men's dermatology growing over 45% year-over-year and women's dermatology more than doubling (Hims & Hers Health, Inc. Presents at 53rd Annual JPMorgan Global Technology, Media and Communications Conference, May-15-2025 10:40 AM).
Bulls point to the company's 2030 financial targets of at least $6.5 billion in revenue and $1.3 billion in adjusted EBITDA as evidence of long-term potential beyond the current setback (HIMS 8-K 05/05/25 Earnings Release). The company's strong balance sheet, with over $300 million in cash and no debt, provides financial flexibility to navigate this transition (HIMS 8-K 02/24/25 Earnings Release). Additionally, the recent European expansion through the ZAVA acquisition demonstrates management's ability to pursue geographic diversification and reduce dependence on any single product category.
The Bear Case emphasizes the significant regulatory and reputational risks that the partnership cancellation exposes. Bears highlight that the allegations of "illegal mass compounding practices" and "deceptive marketing" raise fundamental questions about the company's compliance culture and could invite further regulatory scrutiny (Web - Research - HIMS.UP). The loss of credibility with a major pharmaceutical partner may make it extremely difficult to secure similar relationships in the future, limiting HIMS's ability to offer branded medications that are often preferred by both providers and patients.
Bears also point to the execution risk inherent in HIMS's pivot strategy. While the company has outlined plans for personalized semaglutide offerings, liraglutide launches, and expansion into new therapeutic areas, the regulatory clarity around these initiatives remains uncertain. The company's heavy reliance on compounded medications faces ongoing pressure as more branded drugs come off shortage lists and as regulatory authorities take increasingly strict stances on compounding practices. Given that weight loss had become one of HIMS's largest specialties in just 18 months, replacing this growth driver presents a significant challenge (Hims & Hers Health, Inc., Q1 2025 Earnings Call, May 05, 2025).
The debate ultimately centers on whether HIMS can successfully transform its business model to focus on branded medications, personalized treatments within regulatory guidelines, and international expansion, or whether the regulatory and reputational damage from this episode will permanently impair its growth prospects and partnership potential.
To dive further into NKE, HIMS, or any other public company, head over to Portrait!