Nike Faces Questions Over Dow Jones Membership Ahead of S&P 100 Removal

Nike (NYSE:NKE) faces renewed scrutiny over its position in the Dow Jones Industrial Average following confirmation that it will be removed from the S&P 100 later this month.

S&P Dow Jones Indices announced that Nike will leave the S&P 100 before trading begins on 21 September 2026 as part of its quarterly rebalancing, ending an 18-year period in the index.

The decision follows a prolonged decline in Nike’s market value, which analysts attribute to slowing sales, increased competition and concerns about product innovation.

Although the S&P 100 removal has been confirmed, no decision has been announced regarding Nike’s membership of the Dow Jones Industrial Average.

Nike Holds Smallest Weight in the Dow

Nike joined the Dow in 2013. Since then, its shares have gained approximately 5%, compared with a more than fourfold increase in the S&P 500 over the same period.

With its shares recently trading around $36, Nike accounts for approximately 0.4% of the Dow, making it the smallest component by index weight. It is also the benchmark’s weakest-performing constituent so far this year.

Unlike market-capitalisation-weighted indices, the Dow is weighted by share price. As a result, companies with lower share prices contribute less to the index’s movements.

A Reuters analysis of the 10 changes to the Dow’s membership since 2013 found that at least half involved the component with the smallest weighting at the time of its removal.

“Just looking at it historically, it probably is a candidate for removal,” said Josh Bischoff, partner and head trader at TimesSquare Capital Management.

Nike declined to comment on its index membership.

Dow Changes Have No Fixed Timetable

The Dow does not have an automatic removal rule based on a company’s share price, market capitalisation or index weighting.

According to S&P Dow Jones Indices’ methodology, changes are made as needed in response to corporate developments and market conditions rather than through a scheduled annual or semi-annual review.

Membership decisions are made by the Averages Committee, comprising three representatives from S&P Dow Jones Indices and two from The Wall Street Journal.

The committee monitors several factors, including the relationship between the highest- and lowest-priced shares in the index.

Goldman Sachs, the Dow’s highest-weighted component, traded at approximately $968 on Wednesday, around 27 times Nike’s share price. The committee monitors whether the highest-priced stock exceeds 10 times the price of the lowest, although that threshold does not trigger an automatic change.

Shay Boloor, chief market strategist at Futurum Equities, said the likelihood of Nike’s removal had increased but stressed that the index has no mechanical deletion rule.

“I would describe the odds (of Nike’s removal) as much higher over the next year, but it’s tricky because the Dow doesn’t have a mechanical deletion rule where Nike automatically falls out after crossing some threshold,” Boloor said.

The committee meets regularly, but its discussions are confidential, and no timetable has been announced for a potential change involving Nike.

Recent Index Changes Highlight Share Price Considerations

The Dow’s most recent membership change occurred in June, when Alphabet replaced Verizon Communications.

S&P Dow Jones Indices cited Verizon’s low share price as a factor in the decision. Verizon had been a constituent for more than 22 years, during which its shares gained approximately 35%, compared with a nearly fivefold increase in the Dow.

Other companies removed from the index in 2024 included Dow Inc., Intel and Walgreens.

These changes illustrate how the committee periodically adjusts the benchmark’s composition, although previous removals do not establish that Nike will face the same outcome.

S&P Dow Jones Indices declined to comment on the possibility of further changes.

Nike Continues Turnaround Efforts

Nike’s declining share price has coincided with a prolonged period of operational challenges, including weaker sales and competition from newer sportswear brands.

Chief executive Elliott Hill returned to the company in 2024 to lead its turnaround strategy.

During a June earnings call, Hill described the operating backdrop as a “more complex macro environment,” citing pressure on consumer traffic and discretionary spending across Nike’s markets.

Drake MacFarlane, a research analyst at M Science, also raised concerns about the brand’s appeal beyond some of its established product lines.

“Nike, in the market outside of a couple key franchises, just does not seem to be as appealing to consumers as it once was,” MacFarlane said.

Nike’s departure from the S&P 100 is scheduled for 21 September, while its position in the Dow remains unchanged pending any formal announcement from the index committee.

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