Nike Files Trademarks To Sell Virtual Sneakers For Facebook’s Metaverse

Back in the day, an inventor or company would need to rely on keyword searching alone to find possible prior art. Simply put, theEgyptian Goddessdecision supports design patent holders and reinforces their capacity to prove that infringement has occurred. Nike filed a Patent Infringement Lawsuit against Skechers in October 2019, alleging that they copied Nike‘s patented shoe features. However, Nike still continues to maintain other rights such as the trade dress rights for the shoe’s sole. Nike claims exclusive rights for the word “Waffle” for use on footwear and athletic clothing.

The company’s debt/equity ratio is consistent with industry peers and historical values over the past five years. As a result of its superior financial performance, Nike has outperformed the S&P 500 by returning ~182% versus the S&P 500’s ~107%. Using my FY23 adjusted EPS estimate of $5.89 and a target P/E of 44x, I was able to arrive at my $259/share price target (53% upside). My target P/E is aligned with Nike’s 5-year historical P/E, which I think is more reasonable to use than an industry average. I believe that Nike will continue to trade at a premium moving forward given its fantastic business model and future growth opportunities. If you look at my future earnings estimates for Nike through FY25, you can see that at the company’s current share price, the stock is not so expensive.

Strong Fy21 Q4 Earnings And Promising Outlook Through Fy25

We will useDesign Search from the perspective of a company wishing to develop a sole, upper, or heel. The Nike story began back in 1964 when the brand name was actually called Blue Ribbon Sports. Phil Knight had just completed his university education at the University of Oregon and then on to Stanford for his MBA, these two experiences proved to have quite an impact on his future career. Nike is probably one of the most recognizable and well-known sneaker brands on the planet.

Nike’s shoe design patent rights for the original Waffle shoe have now expired, this is due to the limited time of monopoly that comes with patent protection. Ongoing issues between China and the sports brand could significantly impact Nike’s growth prospects. As of 2021, China was Nike’s fastest-growing international segment (18% growth), accounting for $8.3B in total sales. I stressed earlier in the article how Nike has incredible opportunities for growth. Failing to be on good terms with Greater China would severely blemish the company’s growth expectations. Although the lion’s share of Nike’s total revenue currently comes from its North America segment, Nike continues to observe robust growth internationally.

Sure, if you look at the chart below comparing Nike to several of its close peers, Nike may appear slightly expensive from a P/E standpoint. Nike’s TTM P/E is 47x, slightly higher than its peer median and average of 43x and 45x, respectively. As I said, I think it is more reasonable to compare Nike to itself from a historical lens (3-5 years), given that the company has typically traded at a premium . Although many people are loyal to Nike purely based off the quality of its products, Nike’s membership program is a loyalty scheme that keeps customers closer and more engaged. The membership program allows customers to receive perks via visiting the company’s website or one of its four mobile apps . Benefits for members include priority access to tickets for sporting events, member-only product launches, early access to product launches, and rewards for being active members, among other perks.

• Likewise, the company also provided optimistic guidance for FY22 and beyond, which you can see outlined below.
• Many investors and analysts continue to suggest that Nike’s stock is overvalued.
• Although the company may appear expensive when comparing it to industry peers, I do not see this approach as an effective way to evaluate Nike.
• Phil Knight had just completed his university education at the University of Oregon and then on to Stanford for his MBA, these two experiences proved to have quite an impact on his future career.
• Bowerman was obsessed with enhancing the running shoes of his team and worked continuously on different shoe design models.
• The idea of virtual collectibles has found its way into the sneaker world, which Nike just so happens to be a large player in.

With a market capitalization of $269.1B, Nike is the largest sportswear brand in the world. It is noted that the “rights” to sneakers can be stored in a digital wallet along with the cryptocurrency. Also, with the help of digital media, Nike will be able to control sales volumes of CryptoKicks. An equivalent digital version of the shoe will be created through a cryptocurrency wallet connected with the user’s unique ID.

The company’s enormous size, intertwined with its state-of-the-art brand recognition and customer loyalty, has led to a strong economic moat. However, to prevent anonymous comments from affecting the rights of third parties without the ability to reply, all comments require a valid email address, which won’t be visible or shared. “It’s a more sophisticated way of tracking things in the physical world and digital world,” stated Rachel Walsh a partner in Goodwin Procter LLP’s intellectual property litigation group. “With a piece of apparel, they can track it, make sure it’s not copied, and exchanged between people in the secondary market in a more secure way,” Walsh adds. Whether you’re a designer, inventor, or patent professional Design Search is a valuable tool to have in various design patent-related scenarios. Design Searchcan also be used to help with the design process, to look for creative design ideas, and the latest design patent trends through the major design patent jurisdictions.

Nike Design Patents

Nike has not commented on its plans in the NFT space up to this point; however, the company is surely a prime candidate to benefit from the area moving forward. Many investors and analysts continue to suggest that Nike’s stock is overvalued. I simply cannot agree with such viewpoints when analyzing Nike over the past 3-5 years. Although the company may appear expensive when comparing it to industry peers, I do not see this approach as an effective way to evaluate Nike. I think most investors and analysts are failing to recognize and mention the enormous opportunity Nike will have going forward in the NFT space.

Take our data as a widget or through an API to integrate into your business — Patentcloud can help your business to grow better. Litigation funding Understand the ins and outs of the target patent portfolio—before it’s too late. If you are at an office or shared network, you can ask the network administrator to run a scan across the network looking for misconfigured or infected devices.

Company

InQuartik developed Patentcloud — the patent intelligence platform dedicated to transforming patent data into actionable insights and providing AI-driven solutions. I have no business relationship with any company whose stock is mentioned in this article. Apple was awarded $533.3 million for Samsung’s design patent infringement and a much lower $5.3 million for the utility patent infringement aspects of the cases. Likewise, Nike has an excellent management team, which is often measured via return on equity. Nike’s 3-year and 5-year average ROE are 41% and 34%, respectively, compared to the S&P 500’s long-term average of 14%. This is a good way to see how a company’s management team is utilizing the capital that shareholders have invested.

On average, Nike has experienced growth of 10%, 18%, and 3% in the EMEA, Greater China, and APLA regions over the past five years, respectively. The COVID-19 pandemic significantly halted the company’s growth internationally, which otherwise would have been quite higher. Given Nike’s brand recognition and supply chain mobility, international growth is sure to continue in a positive trend moving forward. Nike has traded at a premium in past years, which I believe is warranted given the company’s business model and strong financial performance.

The digital version of the shoes will contain a cryptographic token based on the Ethereum platform. In addition, it will also have information about the physical features of the product, including color, the material used, manufacturing details, and their “eco-sustainability” factor. The technology also aims to look toward a future of a virtual shoe experience, where https://xcritical.com/ digital renderings of shoes could be traded, sold or even used in online contexts like gaming, stated the company. As you can see, Nike owns more design patents for uppers than any of the other components analyzed. It can be used to look for prior art and/or similar designs to make sure that the inventor’s design does not infringe upon anyone else’s patented design.

The chart below illustrates Nike’s historical and forward P/E at the company’s current share price . If you observe projected earnings out 3-5 years, the company’s valuation becomes far more reasonable, thus emphasizing the importance of a long-term approach. The idea of virtual collectibles has found its way into the sneaker world, which Nike just so happens to be a large player in. In an April 2021 article, it states that RTFKT studios, an NFT marketplace for digital sneakers, sold $3.1 million worth of sneaker NFTs in 7 minutes. Sneaker lovers already possess the qualities of collectors and traders, so sneaker NFTs could be easily engrained into their culture. In 2019, Nike was granted a patent for “CryptoKicks,” a system for releasing digital footwear that could connect the sale of physical shoes with virtual versions.

Knight then joined Stanford’s MBA program, where he wrote a paper on why the production of running shoes should move from Germany to Japan to save on labor costs. Knight went to Japan after his graduation in 1962 where he approached a group of Japanese businessmen and offered his services to export the Japanese brand Tiger shoes to the United States. Bowerman went into business with Knight as a joint venture, and that’s how Blue Ribbon Sports was born. At the University of Oregon, he was on the school’s track and field team where he met the coach, Bill Bowerman. Bowerman was obsessed with enhancing the running shoes of his team and worked continuously on different shoe design models.

Bowerman suggested a new shoe design to Tiger in 1965 to assist runners by providing them with cushioned support. Bowerman’s new design was eventually named the Tiger Cortez and it was released to the public in 1967 and became an overnight success. Join our partner program, create new valuable services, and leverage our patent data and intelligence to develop your business. Nike is a rare case of a very mature company that still has plenty of room for future growth. The system will also enable tracking of the sneakers’ ownership and verification of their authenticity.

The Blockchain will help users verify the authenticity of the shoes that the customers are purchasing. I still stand by the fact that Nike is not as overvalued as some investors are saying it is. On that note, depending on your approach to investing, you may think the stock is expensive. There might be better opportunities than right now to buy Nike’s stock, thus entering a long position today could result in lower returns/losses for investors. I have a base case, bullish case, and bearish case for Nike spanning all the way out through FY25 . As I mentioned earlier, I disagree with the notion that Nike is extremely overvalued.

What Can I Do To Prevent This In The Future?

Bowerman’s main aim was to trim as much weight off of his runners’ shoes as possible. He maintained that his shoes should be as light as possible to make sure his runners suffered fewer blisters. The shoes were so impressive that Knight’s teammate Otis Davis wore them when he won the gold medal in the 1960 Olympics (400-meter dash).

I view Nike as a safe investment that still has incredible upside in the long term. Nike recently provided blowout fourth quarter fiscal year 2021 revenue and earnings, in addition to encouraging guidance for fiscal year 2022 through fiscal year 2025. Nike reported a fourth-quarter EPS of $0.93 and total revenue of $12.3B, both higher than consensus estimates of $0.53 and $11.0B, respectively. The company also provided better-than-expected guidance for the coming years through 2025. Likewise, the company also provided optimistic guidance for FY22 and beyond, which you can see outlined below.

Strong Financial Performance And Excellent Management

For those who are not familiar, an NFT (non-fungible token) is a digital asset that represents real-world objects such as art, music, videos, and more. They are bought in a marketplace online and are encoded with the same software as many cryptocurrencies. As an easy-to-understand summary, they are blockchain-based tokens that represent independently unique digital assets. In the first half of 2021, the NFT market yielded $2.5 billion in sales, 20x the sales in the first half of 2020. The Nike shoe design patent for the waffle sole (US patent No. 3,793,750) was granted on February 26, 1974.

Great Opportunity To Tap Into Nft Space

Through exclusivity, community, personalization, and omnichannel experience, Nike continues to strengthen its already loyal customer base. Nike has been recently awarded a blockchain patent by the USPTO to create digital versions of its shoes. Nike said that its customers will now be able to register the purchase of their shoes with a unique identification number.

Digital sales were up 54%, 40%, and 50% in the North America, EMEA, and APLA regions, respectively. Despite the reopening of stores, Nike continues to realize booming digital sales trends, which is an attribution to the strong investments Nike has made in recent years to improve its digital footprint. The registration of the product on blockchain would allow users to “securely sell or trade” the tangible form of the shoes. Design Searchpicked up on the shape of the upper instantly and displayed many Nike Air Max design patents.Design Searchalso picked up on some of Nike’s competitors. With design patents finally coming into their own, the days of design patents playing second fiddle to utility patents may finally be over. A great example of the power of design patents would have to be the Samsung vs. Apple design patent infringementcases.

Although the guidance is certainly positive, I personally think Nike can outperform its own estimates in the coming years. The company’s OCF/Sales ratio, which emphasizes the ability of a company to turn sales into cash, has been steady between 12%-13% on nike cryptokicks average over the past five years. A consistent or growing trend in this ratio is a positive implication for a company. Nike also ended FY21 with strong liquidity, holding a cash and short-term investment position of $13.5B (up nearly $5.0B from FY20).

Nike Design Patent For Heels

As the COVID-19 pandemic fades away and sporting events resume, Nike has reported an increase in SG&A expenses. For FY22, the company predicts SG&A expense growth to be slightly higher than revenue growth, largely due to increased spending involving sporting events and store openings. The company provided guidance through FY25 estimating that SG&A expenses will be between 32%-33% of revenue on average. Nike has continued to succeed on the digital front as consumers accelerate the shift to online environments for the purchase of goods and services. Digital revenues for the Nike Brand increased 41% year-over-year from 2020, with Nike Digital accounting for ~21% of Nike Brand revenues.

According to Statista, Nike‘s 2019 global revenue amounted to about 39.1 billion U.S. dollars. Freedom to operate Dominate the market through objectivity with data-backed product development. Although there is plenty to boast about when talking about Nike, this section outlines the five key drivers that make the company an excellent investment opportunity today. Nike ended its fiscal year 2019 with anincrease in its revenue of 7% to 39.1 billion dollars, which is due to the positioning of Jordan brand and direct sale to consumer. Design patents are different from the more common utility patents as they protect how an invention looks and how it feels as opposed to the structure and functionality of an invention. He also wanted to reduce his runner’s overall energy strain, so as per his calculations, reducing 28g from a shoe, based on a runner’s six-foot stride, would decrease 25 kg of lift over a 1.6 km distance.