Why Trade Adidas Share Price with AvaTrade?
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Trade Adidas Share Price
Known as ‘the three stripes company’, because of its logo, Adidas was founded in 1924 by Adolf Dassler, who was later joined by his elder brother, Rudolf. They named their company the Dassler Brothers Shoe Factory. But the brothers split in 1949, with Adolf forming Adidas, and Rudolf forming a rival company, Puma. To this day, Adidas is headquartered in Herzogenaurach, Germany.
After nearly going bankrupt in 1993 due to fierce competition, Adidas bounced back and held its IPO on the 17th of November 1995. It is listed on the ‘Deutsche Börse’ (Frankfurt Share Exchange) in Germany, where it trades under the ticker symbol ADS.
The Share is also part of the DAX-30, which compromises only the biggest German companies listed on the Share market. Adidas Share Price is traded under the Apparel & Textile Products Industry and under the Consumer Discretionary sector.
While it may have started as a shoe company, Adidas’ product range expanded quite a bit. The company sells a variety of apparels that range from T-shirts, pants, leggings, jackets and hoodies.
It also designs and makes unique sets of accessories such as style sandals, branded cosmetics, eyewear, smart watches, mobile accessories and bags. But the most important product for Adidas has got to be sportswear, with the company maintaining its traditional commitment to the athlete.
The major focus for Adidas has no doubt been football, the world’s most popular sport, where the company has been a major global supplier of kits and associated equipment for both clubs and national teams.
Adidas also has a heavy hand in other sports, such as baseball, basketball, cricket, golf, gymnastics, lacrosse, running, skateboarding, tennis, and even the non-Olympic but popular Indian sport, Kabaddi.
Adidas has, over the years, used the mergers and acquisitions market to maintain its dominance and to seek strategic growth in key markets.
Its major deals include:
- the 1997 merger with Salomon Group, which led to a temporary change in their corporate brand to Adidas-Salomon AG;
- the 2008 acquisition of Textronics, a company that specialises in the manufacturing of wearable sensors used in fitness monitoring;
- the 2005 standout Reebok acquisition, a competitor with a rich American history, giving Adidas a strong foothold in the lucrative US market;
- and the 2015 acquisition of Runtastic, a fitness tracking app maker.
Adidas Share History
The Adidas share was offered at between 59 marks and 68 marks when the company held its IPO in 1995. The Deutsche Mark was the standard currency in Germany before being replaced by the euro (EUR) in 1999.
Adidas has only had one share split in its history: a 4-for-1 split in 2006. During that time, Adidas was technically one of the highest valued share s in the DAX-30. The split boosted the liquidity of the share among private investors, and also gave its consumers a chance to become part of Adidas story.
After starting on a positive note after the IPO, Adidas remained suppressed, starting from 1998 where it fell from circa €40 a share to less than €12 by February 2000. A bad global economy, as well as goodwill charges from its Salomon Group acquisition, provided the headwinds.
From then on, the share ticked higher gradually, reaching a peak of circa €50 in November 2007, after which the 2008 global financial crisis inspired a tumble that found a bottom at around €22 by December 2008.
A strong share performance followed, with the share rising to a peak of €92 by January 2014. But 2014 turned out to be a bad year for Adidas, despite being a football World Cup year (which Germany eventually won), with long-term rival Nike eating into its market share and new competition coming from emerging companies, such as Under Armour.
The share tumbled to a low of €55 by December 2014, but it survived the competition onslaught and went on to post healthy numbers, which have seen the share hit its all-time high of €218 in 2018.
As of November 2018, the share is trading circa €202, which gives the company a market capitalization of over €40.6 billion. Adidas started paying out dividends in 2006 when shareholders were paid €0.42 per share.
Since then, Adidas share Price has been paying out annual dividends, which as of the fiscal year 2018 stood at €2.60 per share. Adidas has an average payout ratio of 37%, which is within its target range of 30-50%.
How to Trade Adidas share?
Adidas share Price is a high-value that has given investors huge rewards over the years. Still, here is what to consider when trading the share :
- Tariffs and Trade Agreements
Adidas has outsourced over 90% of its manufacturing to third parties, mostly in Asia. The company also operates retail shops all around the world. This makes its margins vulnerable to even minor changes in tariffs and trade agreements in various jurisdictions.
- Legislative and Taxation Policy
Adidas operates in an industry that is a constant target for various legislative or taxation policies. As well, as a producer of premium prized clothing, Adidas has had to deal with the counterfeit menace, which admittedly, the company requires legislation to address.
- Competitor Performance
Adidas faces fierce competition because it operates in a high and fast industry. It is no coincidence that its share has always dipped when competitors seem to be gaining ground or eating into its market share. In its predominant sportswear niche, Adidas is fighting hard with Nike, as well as other brands, such as Puma and Under Armour. With its entry into fitness technology, Adidas will attract even more fierce competitors such as Apple and Samsung. It is important to assess the performance of Adidas’ competition to determine where the company truly stands.
- New Product Rollout
The apparel industry is characterised by high innovation and regular new product rollout. The reason is that consumers are becoming more health conscious, and thus more demanding. An innovative new product launch will have a positive impact on the share , but if this is done by a rival company, investors will be worried.
- Periodical Earnings Reports
Adidas’ fiscal year runs from January to December, and the company releases quarterly reports that give investors a clue of how the business is performing. For Adidas, it is particularly important to look at sales numbers in key markets, such as the United States, Europe and Asia.It would also be wise to look at these factors for their possible short-term impact, rather than the long-term effect because Adidas operates in such a dynamic and fast paced industry that long-term dynamics can shift in an instance.
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Adidas share FAQ
- Why should I trade Adidas shares?
Adidas is one of the top global athletic apparel brands, competing with the likes of Nike and Under Armour. In the five years leading up to the 2020 COVID pandemic shares returned a healthy 260% and the share is well worth keeping on your trading radar for new trading opportunities. The company has a strong growth plan, which should continue to boost shares, especially since Adidas caters to the active lifestyle, and this trend is not likely to go away. As of late 2020 the share is still recovering from the COVID-19 pandemic, and should make good gains as global economies reopen and consumers return to stores.
- Is Adidas the best company to trade in the athletic apparel category?
The German firm Adidas competes on the global stage in the active athletic apparel category with Nike and Under Armour, among others. Its brands Adidas and Reebok have become increasingly popular in recent years as the company has embarked on an aggressive growth strategy that’s been quite successful. Adidas has also been successful in increasing its ecommerce sales, which was especially useful for the company during the 2020 coronavirus pandemic. In terms of share strength Adidas is a good share for trading, as are both its main competitors. New product launches can be a particularly good time to trade volatility in the share.
- What’s the best strategy for trading Adidas?
Adidas shares can be traded directly through a broker, but a better strategy is to trade them using CFDs at AvaTrade. When trading via CFDs there are no trading commissions to drag down your performance, and rather than taking ownership of the shares you trade strictly on the price movement of the share. In addition, CFDs also allow a trader to go short the share just as easily as going long, without worrying about any rules and regulations regarding the short sale of Stock shares.