The stock of sportswear giant Adidas saw impressive gains on Wednesday, significantly impacting the German stock index, the DAX, which reached record heights of 21,274.75 points. Shares surged over 6 percent, nearing 260 euros, after the company exceeded earnings expectations, marking a notable rebound from previous losses.
Despite not yet reaching its all-time high from August 2021 of 336 euros, the upward trend is unmistakable. The DAX itself has seen remarkable buying momentum, reaching five new record levels within just six trading sessions, marking a strong start to the new trading year.
According to Bloomberg, Adidas' stock hiked significantly due to continued demand for classic sneakers such as the Samba and the effective sale of dwindling Yeezy inventory, propelling the stock to its highest price since January 2022. The company reported an operating profit of 57 million euros for the fourth quarter of 2024, rebounding from the staggering loss of 377 million euros the previous year.
Preliminary calculations suggest the total operating profit for 2024 climbed to 1.3 billion euros, up from 268 million the year before, surpassing forecasts set in October. Currency-adjusted revenues surged by 24 percent to approximately 6 billion euros for the fourth quarter, exceeding the average analyst estimate of 5.3 billion euros.
Adidas CEO Bjørn Gulden has refocused the company on its core mission—sports and the development of new footwear and apparel. This shift has renewed investor confidence, positioning Adidas to close the gap with its struggling competitor, Nike. Despite global economic uncertainties, Adidas continues to target double-digit revenue and profit growth. The company plans to announce its final financials for the fiscal year 2024 on March 5, alongside its financial outlook for 2025. "We see potential to increase our market share across all markets," Gulden stated, emphasizing the brand's ambitions.
On the broader market front, the DAX gained about 1.1 percent shortly after trading began, driven by Adidas alongside other strong performers like SAP and Siemens Energy. The upward pressure remains bolstered by solid performances from U.S. markets, though analysts caution the index appears to be overheating with the momentum indicator RSI already above 77, indicating overbought conditions.
Intriguingly, the DAX recently reached extreme metrics, with the hourly RSI hitting 87, which could signal a potential market pullback on the horizon. Chart analysis indicates the DAX could still push near 21,450 points before facing any significant consolidation.
This analysis, provided for informational purposes, does not constitute financial advice and should not be interpreted as specific investment recommendations. Past performance is not indicative of future results, and readers should engage with this information with caution, as individual circumstances vary.
Overall, the stock market reaction to Adidas' resurgence reflects broader investor confidence, hinting at both company-specific successes and the overall health of the European stock market. The season’s performance has undoubtedly set expectations high as Adidas navigates its path to reclaim its status as a significant player alongside Nike and other industry leaders.