Nike, Inc (NYSE: NKE) is a worldwide leader in athletic apparel. The famous swoosh logo was created in 1971, nine years before the company went public.

If you had invested $1,000 during Nike's initial public offering (IPO) without reinvesting dividends, your investment would be worth nearly $180,000 as of June 2021. This represents almost a 200-fold return on your initial investment.

Key Takeaways

  • If you had invested $1,000 during Nike's initial public offering (IPO) without reinvesting dividends, your investment would be worth nearly $180,000 as of June 2021.
  • Nike is a leading global brand that makes sneakers, athletic wear, and many other products for sports professionals and general consumers.
  • Nike first began as Blue Ribbon Sports in 1964 and became incorporated as Nike in 1971. Since its humble beginnings, when the company was worth just $1,200, it has become one of the world's largest and most well-known sportswear and lifestyle brands.
  • In December of 1980, NKE shares debuted through their IPO at $10.50 per share at the time—after several stock splits and a rise in share value, that would have produced nearly 200 times in return today.

History of Nike

Nike began as Blue Ribbon Sports in 1964. Co-founder Phil Knight created the name shortly before a meeting with a Japanese shoe manufacturing company. Knight was representing a company he hadn't even started yet. Blue Ribbon Sports sought to find lighter and more durable shoes for runners.

Bill Bowerman and Phil Knight developed the name Nike in 1971. Jeff Johnson helped to create the name, iterating from the Greek Goddess of Victory. 1971 was a big year for the company. Along with the name change, Co-Founder Bill Bowerman created the first Nike shoes, the waffle trainers. While making waffles, Bowerman thought the pattern would lead to increased grip for runners.

In 1971, Nike also paid $35 for the creation and design of its swoosh logo from Portland University student Carolyn Davidson. She was later given a swoosh ring and stock in the company for her contribution.

IPO Investment

In 1972, Nike signed its first athlete endorsement contract with tennis professional Ilie Nastase. Athletic endorsement deals would prove to be an essential part of the Nike marketing strategy going forward.

Nike’s stock was launched to the public markets in an initial public offering (IPO) on December 2, 1980. The IPO price at the time was $10.50 cents. Adjusting for stock splits over the years, this translates to $0.75, not adjusted for inflation. Adding in the effects of inflation (as of June 13, 2021), that is the equivalent of just $0.24 in today's dollars.

In 1980, $1,000 at the time would have bought 95.24 shares (assuming you could own fractional shares). The stock then split 2-for-1 seven times since then. After stock splits an investor would have 1,333.36 shares for a total value of $176,003.52 at today's share price of $132 (as of June 13, 2021).

Nike began paying a quarterly cash dividend in 1984. Since 2004, the company has also been steadily increasing the dividend on an annual basis. In the trailing twelve months through June 2021, Nike has paid $1.07 per share in dividends.

Rise of an Empire

Nike's move into basketball was aided by the endorsement of Michael Jordan in 1984. Its signature shoe, the Air Jordan, was initially banned by the National Basketball Association (NBA), drawing a wave of free publicity to the company. In 1986, Nike revenues passed $1 billion for the first time.

The success of Jordan's endorsement deal with Nike led to many other successful partnerships. Nike has signed endorsement deals with stars or teams from every major sport around the world. In 2011, the company secured a five-year contract with the National Football League (NFL) to be the exclusive provider of player apparel. They have continued the contract with renewals including the most recent in March 2018 for eight years.

Nike's famous "Just Do It" slogan was released in 1988. The first Nike store opened in 1990 in downtown Portland, Oregon, near the location of the company’s headquarters in suburban Beaverton, Oregon. Nike's first acquisition was made in 1988 with the purchase of Cole Haan. Other acquisitions include Bauer Hockey, Hurley International, Converse, Starter, Umbro, Virgin Mega USA, Zodiac, and Invertex. In an effort to focus on its core brands, Nike began divesting companies in the late 2000s, selling Starter, Bauer Hockey, Umbro, and Cole Haan.

The company continues to battle German rival Adidas for control of the international soccer market and has signed many top soccer players to endorsements. In the first quarter of 2019, the company spent $964 million in demand creation, which included advertising, promotions, and endorsements.