Why Is Adidas (ADDYY) Stock Down Today?
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Adidas (OTCMKTS:ADDYY) stock is falling on Tuesday after the sportswear company cut ties with Ye, formerly known as Kanye West, over controversial comments made by the rapper.
According to a statement from Adidas, the company is severing its relationship with Ye as it doesn’t tolerate “antisemitism and any other sort of hate speech.” This is in effect immediately with the company ending the creation and sale of Yeezy-branded products.
Adidas notes that it will suffer some short-term negatives due to these actions. As a result, the company expects to see a $246 million impact on its net income in 2022. It will give holders of ADDYY stock a more in-depth update when it releases earnings on Nov. 9, CNBC notes.
ADDYY Stock’s Trouble Spreads Beyond Ye
The company is dealing with high inventory right now due to slowing economic interest. As a result, it will likely have to heavily discount many products in its catalog as the cost of profits. That likely won’t go over well when earnings come out.
Adding to that, Adidas has already warned investors about financial issues twice this year. That includes profits coming in lower than expected. It’s also seeing revenue growth slow as interest in its brand wanes in China.
All of this news has shares of ADDYY stock falling 6.7% as of Tuesday morning. Those shares are also down 67.1% year-to-date.
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.