Yahoo Finance

On a chilly evening in late February, millions of people geared up to watch the latest installment of the greatest rivalry in college basketball — Duke vs. University of North Carolina (UNC) at Cameron Indoor Stadium in Durham, North Carolina. What those thousands in attendance and millions of people watching at home witnessed will live in NCAA infamy: The biggest star in the nation, Duke University forward Zion Williamson, had his left Nike PG 2.5 sneaker explode, with his foot completely tearing through the lateral side of the shoe and slightly injuring his knee in the process.

This was a terrible moment for Nike (NKE). Adding insult to injury, former U.S. President Barack Obama was in attendance, and cameras caught the 44th commander-in-chief say, “His shoe broke.” The next day Nike closed at $83.95 a share, almost a dollar off the $84.84 close of the previous day. The next day, the stock not only bounced back from the incident, it actually surpassed its pre-Zion levels. As of March 20th, Nike was trading at $86.89.

But the ruling for Nike from the court of public opinion was harsh. There were countless barbs and memes thrown Nike’s way — and not just from lay people. Nike’s rival Puma even got in on the action, tweeting: “Wouldn’t have happened in the Pumas.” (Puma later deleted the tweet.)

An incident as embarrassing as having your product explode on national TV would be enough to spell doom for other companies, but Nike isn't just another company. Since the ‘70s, Nike has etched its way into the fiber of American culture. The same way people think of Coca-Cola when they think about soda, many Americans think of Nike when they think about sneakers. The scope of Nike’s global footprint is massive. The company boasts annual footwear sales of $22.3 billion, which is just under $8 billion more than its nearest competitor, Adidas, pulls in. The Oregon-based company owns almost 20% of the global sportswear market share, according to Euromonitor International.

Moreover, even if the Zion incident raised concerns over the quality of its basketball sneakers, a saving grace for Nike is that basketball products only account for a small fraction of that, according to Jay Sole, who covers Nike for UBS.

“It was impactful, but on the grand scheme of things, it's really only going to be impactful to people who really are focused on basketball. And even right now, basketball is only a pretty small fraction of Nike total business … At the end of the day, the stock moves on earnings. How much money the company makes, and this event [had] almost zero impact on how much money they make, at least in the near term.”